John Murphy·April 22, 2024

The Double Life of Owning a Business 2.5 Hours Away | John Murphy Interview

John Murphy is a US Army veteran (6.5 years active, two combat tours) who transitioned through a corporate career, built a 100-unit real estate portfolio, then acquired a 60-year-old commercial and industrial painting company in Grand Rapids, Michigan called Dale of Cold Decorators — 2.5 hours from his home in Northern Indiana. The purchase price was approximately $3.5 million (including real estate), financed with an SBA 7(a) loan at 80% LTV, a 10% seller note, and 5% standby seller note treated as equity, with only 5% cash equity from John. The business generates roughly $8 million in revenue with about $1 million SDE at purchase. John lost a prior deal (a fencing company at $2.3M, ~$700K SDE) one week from closing after 5 months and $40K in costs, which led him to a mastermind group under Kyle Malisani and refined his search process. The central challenge is managing a highly seasonal, heavily leveraged business through the winter cash flow trough while professionalizing a legacy operation with a deeply tenured but aging workforce. John's thesis centers on a long-term hold, growing revenue toward $10M+ and improving margins to 20% by transitioning toward a hybrid subcontractor model, expanding the industrial coatings segment, and bringing in technology and sales infrastructure the prior owner never built.

Deal facts

purchase price: $3.5m (including ~$500k real estate)
sde ebitda: SDE ~$1m at purchase
revenue: ~$8m revenue
financing structure: SBA 7(a) 80% LTV + 10% seller note (interest only, 5-year bullet) + 5% secondary seller note (full standby, treated as equity by SBA) + 5% cash equity injection; real estate 100% seller-financed separately
notes: ~$500k working capital included in deal and transferred to buyer prior to loan closing. Buyer operated under 3-page management agreement Oct-Nov before SBA loan closed end of November. Real estate excluded from SBA loan due to environmental (phase 1/2) issues; seller financed at ~$500k with buyer paying ~$500 in closing costs. Business: Dale of Cold Decorators, Grand Rapids, Michigan. 60-year-old commercial painting company.

Why this business

Found on BizBuySell after expanding geographic search to neighboring states and targeting businesses with SDE of $1M+. The company was 60 years old — 'a company that doesn't stay in business that long unless there's something there' — and had a strong, tenured management team already running day-to-day operations, meaning the previous owner was not in the business regularly. John wanted to own and operate rather than buy himself a job, and the existing infrastructure made that possible from day one.

What's working

Deep management bench: VP with nearly 20 years, two admins with about a decade each, main salesperson with 17 years, and three superintendents each with 20-30 years — highly autonomous and tenured team
60-year-old business with proven longevity and strong customer relationships in commercial painting (Meijer/big-box retail repaints, industrial coatings)
In-house blasting and coating shop creates a quasi-recurring revenue stream from industrial customers who repeatedly need products coated and blasted
Seller was highly motivated and cooperative — opened books, introduced entire team on first site visit, transferred $500k working capital on a 3-page agreement before loan closed, and 100% seller-financed the real estate
W2 painter workforce (vs. subcontractor model) provides competitive differentiation in quality and flexibility, though at higher cost
VA loan used to buy a house near the business, adding real estate alongside business asset for minimal cash outlay

What's hard

Severe seasonality: exterior painting shuts down mid-November through March in West Michigan, cutting revenue roughly in half during winter — combined with heavy debt load, this creates significant cash flow pressure
High leverage (brought only 5% cash equity) means winter cash flow trough is acute; managing through it for the first time without full-season experience
Two-month pre-close management period (Oct-Nov) created unanticipated costs: double insurance premiums, a $30k overspray incident, and $35k in phase 2 environmental assessment on the real estate
Business 2.5 hours from home in Indiana requires living a 'double life' — alternating weeks in Indiana (custody of two kids, real estate) and Michigan (running the business)
Legacy family-business culture: team does things 'the way they've always done things'; professionalizing with EOS and redefining roles is a priority but takes time
Aging workforce: most painters have been with the company a long time and are older — knowledge transfer to next-generation painters is a top 3-5 year priority
First deal (fencing company, $2.3m purchase price, ~$700k SDE) collapsed one week from closing after 5 months of due diligence and ~$40k in costs, due to seller backing out over collateralization and subordination terms on the seller note

Notable quotes

I live a double life right now so I have 50% custody of my two kids and I live a week in Indiana do some real estate things do the dad thing and then the other week I'm here in Michigan running the business.

I negotiated half a million in working capital as part of the deal and on October 1st when we signed that three-page agreement he transferred that working capital into my account and let me start running the company — not only had I not given him a dollar but he transferred the working capital to me with just the three-page agreement.

So if you compare: I own a duplex outright worth around $200,000, it returns around $20,000 a year in annual cash flow. Same capital outlay in a small business acquisition like the one I just did — I now have an asset that's going to produce half a million dollars of cash flow annually. Same capital outlay, $20,000 versus half a million. That's the power behind small businesses — they are cash producing machines.

To do anything big in your life there's going to be a period of imbalance. People say I want to buy a business so I can have more time with my family — yes, that's the end goal, but what does it take to get to that end goal? Usually it's an intense amount of pain and suffering for the short period because you have to sacrifice something to get that.