Garrison Snell·July 1, 2024

How to Turn $500k into a $38m Holdco (No Investors) | Garrison Snell Interview

Garrison Snell is a 30-year-old Nashville-based founder of Snell Ventures, a permanent family-business holdco he built from a $500k post-tax exit from a music-industry marketing agency he sold at age 24. Over five years he deployed that capital — using SBA loans with personal guarantees and no outside investors — into five operating companies totaling $37m in revenue and ~$9.2m EBITDA at year-end 2023. His portfolio is concentrated in niche heavy manufacturing: trailer suspension hardware (New Deal Trailer Parts), babbitt bearings (Quad Industries, Bradford TN), a large South Carolina job shop, and portable stacking racks (Tier Rack, St. Louis), plus an unnamed medical trust administrator. His investment thesis is deeply influenced by Buffett/Berkshire and Porter's five forces — he seeks businesses that are 'a small piece of a big thing,' with pricing power, barriers to entry, and few substitutes, targeting a 20%+ unlevered yield and a blended ~4.5x EBITDA multiple. His explicit mission is community stewardship: using business earnings to fund hyper-local giving guided by long-tenured employees who know their towns intimately, and he attracts sellers who accept below-market prices to ensure their businesses are held permanently. The episode is candid about the cost of rapid, decentralized scaling: a complete plant walkout two days before recording exposed failures in communicating culture during integration, and Snell acknowledges his management systems are still maturing.

Deal facts

purchase price: Total deployed ~$38m across five operating companies; individual deals: Quad Industries $1m (incl. real estate appraised at $550k); New Deal Trailer Parts $900k; Columbia SC job shop $9.9m (incl. real estate); Tier Rack (purchase price not stated); trust/financial services company (purchase price not stated)
multiple: Blended average ~4.5x EBITDA; range 1.5x (Quad) to 6x; target yield >20% on purchase price
sde ebitda: Portfolio EBITDA ~$9.2m at year-end 2023; Quad at acquisition ~$300-400k, now $750-900k; New Deal at acquisition ~$300k, grew to ~$2m in 2021
revenue: Portfolio revenue $37m at year-end 2023; New Deal grew from $1.4m to $7.8m by end of 2021; Quad from $1.8m to ~$3.5-4m
financing structure: SBA loan (single loan covering two simultaneous acquisitions — Quad and New Deal — blended with Quad real estate, 19-year term); personal guarantees on all loans; no outside investors; initial capital from $500k post-tax agency exit
notes: Holdco is Snell Ventures, headquartered in Nashville TN. Five operating companies: (1) New Deal Trailer Parts, north of Nashville, est. 1955, trailer suspension hardware; (2) Quad Industries, Bradford TN, est. 1909, babbitt bearings; (3) Large job shop, Columbia SC, acquired summer 2021 for $9.9m, largest non-captive metal stamper in South Carolina; (4) Tier Rack, St. Louis, portable stacking racks; (5) unnamed medical trust administrator for paraplegic families (80% owned, 20% founding family). Restaurant (Nashville) sold majority stake, retains 10%. Chattanooga rental portfolio (11 units) still held. No outside investors in any operating company except 20% family retain in trust business.

Why this business

Snell wanted to use capital to do maximum good for maximum people in a permanent, sustainable way. He identified family-owned small businesses as uniquely positioned entities: they have intimate knowledge of their communities, relationships with employees and local families, and can direct excess earnings to community needs unilaterally. He focuses on heavy manufacturing businesses with durable competitive advantages (Porter's five forces), buying them with the explicit intent to hold forever and steward them as the next generation of ownership — preserving the mission of prior owners who already directed resources toward employees and community.

What's working

Permanent hold philosophy attracts motivated sellers who accept below-market prices in exchange for knowing the business will be stewarded — Tier Rack sellers chose Snell over PE offers ~$6m higher
Heavy manufacturing focus with Porter's five forces screening: businesses that are a 'small piece of a big thing' — essential but low-cost components — giving pricing power and low customer switching urgency
Quad Industries: ~65% gross margins, strong customer bargaining power due to tight tolerances only achievable with WWII-era equipment, small oligopoly of competitors, identified and resolved the key supplier risk (Federal Mogul material) by sourcing overseas
New Deal Trailer Parts: culture of radically low overhead built over 70 years; grew from $1.4m to $7.8m revenue and $300k to $2m EBITDA in roughly 18 months
Hired experienced CEO from Illinois Tool Works (ITW) with decentralized holdco model background to run manufacturing group
Recycling all earnings back into new acquisitions at same 20%+ yield target; no outside investors
Community giving program: every employee/department has at least $1,000/year to direct to local community needs; annual reports of charitable giving used to authenticate mission to prospective sellers
Real estate ownership alongside operating businesses where possible; Chattanooga rental portfolio generating ~15% cash-on-cash return

What's hard

Workforce walkout at one plant (two days before recording) due to poor communication and integration of benefits changes (healthcare, handbook, direct deposit) — employees felt abandoned and unheard despite changes being net positive
Decentralized model means Garrison is not present enough at plants; employees need to feel his culture and mission personally, not just through operators below him
Communication channel above plant floor blocked bad news from reaching leadership — no early warning system in place
Restaurant acquisition (pre-manufacturing) failed as a holdco asset: small 60-seat kitchen made staffing difficult, couldn't spread shifts across enough cooks, sold 90% within ~6-7 months
Quad's key supplier (Federal Mogul) announced discontinuation of babbitt-on-steel material shortly after acquisition — seller had believed this was existential; Snell resolved it by finding overseas suppliers
Being young and self-taught means some integration and management systems not yet mature; chalks up operational failures to being 'a young company'
Cyclicality in Tier Rack (boom-and-bust demand, currently in a low)

Notable quotes

My little personal motto is maximum good for maximum people and if I'm going to spend my life doing something to help others I'd like to do it in as large and permanent a way as possible.

That little business can decide in a unilateral fashion what to do with its excess and it knows — it has an informational advantage in that it knows what's going on in the lives of its people, their families, and that immediate town.

I traded that mission for money. I traded that mission for some money. And so I woke up with some money in my bank account and not a reason to get up and go to work — nothing to do, no mission, and almost I would say very little purpose.

We have put out 38 million to do that at that price. And then last year our EBITDAs were like 9.2 as a group.