Matthew Saskin·May 1, 2023

How to Buy a $5m Business & Hire an Operator to Run It | Matthew Saskin Interview

Matthew Saskin, a tech executive from Durham, NC with a background in technical sales leadership at large enterprises and startups, parlayed profits from a sold-off 50-door real estate portfolio into the acquisition of East Coast Towing, a 25-year-old towing and recovery company in the Raleigh area, for $4.1 million in December 2022. The business generates approximately $5 million in annual revenue at 15-20% EBITDA margins, making it one of the largest towing operations in the region. Rather than becoming the owner-operator, Matthew immediately installed Matt, a 20-year Navy captain with SMB consulting experience, as GM — while retaining his own well-paying W2 job — and structured a phantom equity program to align long-term incentives. The episode is a detailed case study in the 'investor-operator' model: buying a bigger-than-typical SMB that can support professional management from day one, rather than the conventional self-funded searcher playbook of operating yourself first. Key value creation levers include digital marketing (Google reviews, website refresh), culture-building, systematizing undocumented operations, and pursuing the highly fragmented commercial accounts and cash call segments in an industry Matthew sees as analogous to HVAC a decade ago — ripe for professionalization.

Deal facts

purchase price: $4.1m
sde ebitda: SDE/EBITDA ~$750k-$1m (15-20% margin on ~$5m revenue)
revenue: ~$5m
financing structure: SBA loan (implied, 10% down structure referenced); retained W2 income to minimize personal draw
notes: Asset allocation: $3.2-3.3m of $4.1m purchase price was tangible assets (trucks/trailers/equipment). Business had prior bankruptcy (2016) which scared other buyers. 25-year-old business. Closed December 2022.

Why this business

Matthew wasn't seeking a towing business specifically — he discovered East Coast Towing on BizBuySell and was drawn in by its scale (one of the largest towing companies in the Raleigh area), the fragmented and unsophisticated industry ripe for professionalizing, and a simple durable thesis: more cars on the road, aging fleet, growing freight traffic. He saw it as analogous to HVAC 10 years ago — highly fragmented, mom-and-pop dominated, and wide open for someone bringing modern operations, hiring, and marketing practices. The high capex and prior bankruptcy scared others away, giving him a better price and less competition.

What's working

Hired a strong operator (Matt, a 20-year Navy captain with SMB experience) from day one via SearchFunder, allowing Matthew to remain in his W2 role while the business runs
Phantom equity program with 4-year vesting and variable cash comp tied to revenue and EBITDA growth to align GM incentives with long-term value creation
Google review velocity campaign: grew from 380 to 520+ reviews, pushed rating from 4.6 to 4.7 stars, driving more cash calls via organic search
Website refresh and digital presence update (previously untouched for 5+ years) driving top-of-search positioning for 'towing near me' cash calls
EQ-heavy first 30 days: allaying fears of longtime employees from the founding family, building trust and culture where employees feel heard and empowered to raise issues
Commission-based driver pay creates natural revenue-to-labor cost lock, preserving margins as volume grows
Rotation contracts with police/highway patrol provide recurring, high-margin revenue including storage accrual and lien sales of unclaimed vehicles
Industry is growing 3-4% CAGR driven by more cars, older vehicles, and increased freight traffic — fundamentals are durable

What's hard

Finding and retaining CDL and skilled tow truck drivers — industry-wide labor shortage; prior owners used only passive methods (Facebook posts, walk-ins)
High capex business: ~$3.2-3.3m of the $4.1m purchase price was trucks and trailers, and depreciation is a real ongoing expense
No documentation or operations playbook existed — all knowledge was stored in employees' heads; systematizing processes from scratch
Employee emotional turbulence at close: the business had been family-run since founder's death, and workers felt a sense of betrayal at the end of that family era
Prior GM (minority owner who stayed on briefly) had suppressed employee feedback, creating a culture where people had stopped voicing problems
Operator (Matt) lives away from family in Colorado, requiring careful structuring of remote weekends — a potential retention risk
Rotation revenue cannot be grown organically; requires opening new facilities to access new geographic rotations

Notable quotes

I didn't think that was an unreasonable approach even at sort of the smaller scale and to be clear like $5 million in revenue is not it's not a particularly small business and in this industry in general we can get more into it like we're a sizable business in the towing and recovery industry.

It sure seems like the way this industry feels now is much like the HVAC business did say 10 years ago so I think there's a lot of room to run over the next bunch of years in bringing a level of professionalism to how you operate and how you how you market and sell and grow these businesses.

Month one quite frankly we really didn't look at much operationally... first 30 days for us were meeting the people allaying concerns kind of becoming members of the team um making sure they all understood what the goals were which is quite frankly not to change a lot but to make it better in a couple of discreet ways.

When I say sort of behind on the everything curve um it truly does mean everything right... there's still the ability to really gain something over time whereas there are so many technology Services businesses um that you know if you're a $5 million one there's not much you can do.