Derek Turner·June 12, 2023

Owner vs CEO 2 Approaches to Buying a Business | Derek Turner Interview

Derek Turner is a two-time acquirer who offers a rare inside view of both the traditional search fund model and self-funded search. His first acquisition (April 2018) was a pavement management engineering services company in Phoenix — ~$5M revenue, ~$1-1.5M SDE, 28 employees — that used laser-equipped vans to assess street conditions for city and county governments. The deal was found through relentless proprietary outreach and geographic focus. The business proved extremely challenging: uncooperative sellers who hid a years-long personal feud, an unplanned $3M capex to replace the laser van fleet, highly specialized and difficult-to-recruit labor, COVID-driven customer payment issues, and the structural pressure of traditional search fund economics demanding aggressive growth the business could not sustain. After four years, the company was sold to a van manufacturer wanting to enter the services side. His second acquisition (closed January 2023) was Rola Shield, a rolling shutter fabricator and installer in Phoenix founded in 1979, purchased via SBA loan — a simpler business with loyal customers, enthusiastic word-of-mouth growth, and a much smoother seller transition. The episode centers on the experiential contrast between being a CEO (steward of others' capital) versus an owner (personal capital and legacy), and Derek advocates for geographic search focus, relentless follow-up, operating the business before installing a GM, and maintaining a board even in a self-funded deal.

Deal facts

sde ebitda: SDE between $1m and $1.5m (Engineering Services, first acquisition); SDE between $1m and $2m (rolling shutters, second acquisition)
revenue: $5m (Engineering Services, first acquisition)
financing structure: Traditional search fund (first acquisition); SBA loan + outside equity investors (second acquisition)
notes: First acquisition: engineering services company (pavement management), closed April 2018, ~28 employees, sold May 2022. Second acquisition: rolling shutter fabricator/installer (Rola Shield), founded 1979, closed January 3, 2023, LOI signed October 1, 2022. Fleet of 4 laser vans required ~$3M unplanned capex replacement within 18 months of first acquisition.

Why this business

For the engineering services company: it was a repeatable, obscure niche serving city and county governments on pavement management — few competitors, large market opportunity, and owners who wanted to retire but hadn't pursued growth. For the rolling shutter company (Rola Shield): Derek had known the owners since 2017, had an existing relationship with them, it was an ideal SBA acquisition with long history (founded 1979), strong cash flow, enthusiastic customers, and a product with untapped market awareness despite no marketing or sales spend.

What's working

Geographic focus during traditional search (Metro Phoenix) allowed high-velocity pipeline: cold calls converted quickly to in-person lunches, accelerating relationship-building and deal velocity
Relentless proprietary outreach and follow-up: contacted the engineering services company 11 times over 3 months before getting a response; first response December, LOI signed February, closed April
Rolling shutter business has grown steadily for a decade on word-of-mouth alone with zero marketing or advertising spend, indicating strong product-market fit
Customers are highly enthusiastic — all customers called in first 5 months loved the product; one credited it with saving her life
Seller relationship for second acquisition was exceptional: sellers introduced Derek to employees 2 months pre-close, allowed him to work in the business for 6 weeks before close
Having a formal board of long-time operators (from traditional search fund background) provides strategic accountability, mentorship, and forced reflection even in a self-funded deal
Engineering services company grew top-line revenue ~40% in first 18 months under ownership

What's hard

First acquisition sellers were extremely difficult to deal with post-close — hated each other (had not spoken for 2 years despite being 50/50 owners) but hid this during diligence
Laser van fleet was borderline defunct at acquisition; required ~$3M unplanned capex to replace all 4 vans within 18 months
Simultaneously managing 40% top-line growth and a complete technical overhaul of all data workflows — growth required servicing that strained highly specialized workforce
Field crews needed to be on the road 330 days/year with no fixed home — extremely difficult to recruit; pavement engineers willing to do financial analysis were also a very rare Venn diagram
COVID hit just as the business was getting on top of its challenges; a large customer could not pay due to technicality, requiring significant layoffs
Traditional search fund capital structure demands high growth (25-30% IRR), creating tension when business reality dictates slower, more sustainable growth
Personal identity tension of transitioning from traditional search fund CEO (steward of other people's capital) to self-funded owner required rebuilding relationships with investors under new economics
Sucker vs. good soldier dilemma: stayed in a difficult business for 4 years out of obligation to investors even when clear there would be no great financial outcome

Notable quotes

I learned that I hated trying to find product market fit so the slog of just starting at zero with a product that you were trying to make the world care about — that journey I have an immense respect for entrepreneurs who do that. After doing it twice I just know that I do not like doing the zero to one. But what I did love and the biggest learning from that time was that once we had product market fit and suddenly we were in an operating business creating value, dealing with all the challenges of growth, I loved that.

Follow-up is the forgotten part of search in my mind. A lot of Searchers who especially come from more elite backgrounds think that the rudest thing in the world is to call somebody three times over a month if they haven't gotten back to you. But if you treat this like a sales role you treat silence as the enemy. You assume silence means that they just haven't gotten around to responding to you and you never assume that silence means no.

There were days where my best-case scenario that I would daydream about is that I would walk into a board meeting and my board would just fire me — because then it wouldn't be my fault. Then I wouldn't have quit and I would be able to walk away knowing that I hadn't failed them or at least I hadn't chosen to fail them.

Growth is horrible in many ways. I think when I first searched there was a part of me that would judge business owners for having not grown their business more and for plateauing, and now after the experiences I've had I in no way judge a business owner for not growing their business. Growth is terrifying and has a lot of upside but also a lot of downside.