How to Buy & Grow a Subcontractor Business | Brenden Van Buren
Open on YouTube ↗Brenden Van Buren comes from a fifth-generation Pennsylvania construction family (New Enterprise Stone & Lime, ~$1B revenue) and attended Carnegie Mellon's Tepper School, where he co-founded GTE (Generational Transfer Entrepreneurs), a bootstrapped search accelerator. Through GTE he conducted a traditional proprietary search and in June 2018 acquired Pro Max, a commercial fencing subcontractor in central Pennsylvania doing $12-13M in revenue with approximately $2M in EBITDA. The seller, Russ, had no children and agreed to a structured 90/90-day reciprocal shadowing transition; Russ remains informally involved years later and has provided ongoing acquisition referrals per deal incentives written into the APA. Since the acquisition, Brenden has nearly doubled sales through geographic expansion (new State College office), tuck-in crew/equipment acquisitions, adding estimators, and implementing management layers that the founder had resisted — a pattern he describes as common: founders who know every corner of their business but can't let go. The episode also covers Brenden's views on traditional vs. self-funded search, the value and perishability of proprietary search pipelines, the importance of relationship-building and salesmanship in search, and GTE's eventual pivot to a conventional search fund investor model.
Deal facts
- sde ebitda
- ~$2m EBITDA (average over prior years)
- revenue
- $12-13m
- financing structure
- SBA loan with personal guarantee; additional family/investor equity (GTE/Van Buren family capital); investor put options referenced
- notes
- Closed June 2018. Seller (Russ) had no children; transition structured as 90-day shadow by buyer, then 90-day shadow by seller. Seller incentivized for acquisition referrals via asset purchase agreement. Business is Pro Max, a commercial fencing company in Pennsylvania.
Why this business
Brenden grew up in construction (fifth-generation family business doing nearly $1B in sales), was comfortable with the industry, and specifically sought niche subcontractors because he believed they commanded better margins than general contractors. He was familiar with fencing subcontractors from his family's GC work. He also liked that the capital equipment (skid loaders, pickup trucks) was manageable, and he built a strong personal relationship with the seller that made the deal feel right.
What's working
- Near-doubling of sales in roughly four years through a combination of organic growth and acquisitions
- Opening a new office in State College, PA and purchasing another office location north of headquarters
- Adding estimators and expanding geographic bidding reach
- Tuck-in acquisitions of crews and equipment
- Implementing management tiers and hiring an operations manager, freeing the business from the founder's flat, micromanagement-heavy structure
- Strong ongoing relationship with seller Russ, who continues to make acquisition referrals beyond the incentive period
- Methodical 90/90-day transition shadowing process that preserved employee confidence and retained institutional knowledge
What's hard
- Material cost spikes in 2021 and into 2022 prevented full EBITDA doubling despite revenue growth
- Business was shut down for an entire month during COVID-19, eliminating what would have been approximately 60-70% growth in 2020
- Construction businesses face cyclicality risk (though Brenden modeled it in and focused on commercial/industrial rather than residential)
- Project-based revenue means no recurring cash flow — must win every bid; estimating quality is critical
- Getting bank financing comfortable with cash-flow lending (vs. asset lending) in the construction sector required shopping multiple lenders
- GTE (the search accelerator) lost momentum during COVID and was ultimately pivoted to a traditional search fund investor model, partly due to bandwidth constraints from managing silent LPs
Notable quotes
If you go to a Beach Community walk along the beach and look at how many two to ten million dollar houses there are the vast majority of those — some are owned by hedge fund guys — but a lot of them are owned by small business owners.
One thing I always like to say is you make your own lock in search — you're setting out all these emails you're talking to owners you got to find the owner at the exact right instant. Once you get three or four months passed that owner might change their mind.
If it's not in distress you don't need to go make changes right off the bat. Focus your energies on a smooth transition, on absorbing and learning as much as you can.
If you hadn't bought the business I know I needed to hire these three people I just don't know if I could have gotten myself to do it.
You can pay yourself a really good MBA salary and raise a traditional search fund and go get very good economics. You can scrape things, use your own capital, eat into your savings for several years, possibly buy a really good company, and still end up with similar economics unless you get just that diamond in the rough where you get great seller financing, all SBA, and can put in very little equity on your own.