John Hubbard·May 9, 2022

Why Buy a Small Manufacturing Business

John Hubbard is a 13-year Army veteran (airborne, special operations medic) who briefly worked in law enforcement before pivoting to small-business acquisition. He earned an executive MBA at SMU while simultaneously working as a de facto GM at a $10m exterior remodeling company to build operational credibility, then searched exclusively in Tampa Bay — a market he chose for personal reasons — finding most deals on BizBuySell and through a handful of local brokers. In February 2021 he acquired Express Trailers (renamed Express Custom Trailers), a 30-year-old enclosed-trailer manufacturer in Florida with ~$4.9m revenue and approximately 35 employees, sourced off-market through his lead investor Sam Rosati's network. The business was already owner-absentee with two long-tenured VPs running operations, exactly the profile John targeted. His most consequential early move was firing all 15 dealer relationships within his first month — half the revenue but every dollar a money-loser — and redirecting that production capacity to commercial accounts at 40-45% margins, while simultaneously raising prices 30-35% to match input cost inflation without any customer pushback. By year one revenue had grown to $5.6m and the business was on track toward $6m in 2022 with materially better margins, a nearly-full forward order book, and zero sales or marketing spend. John credits his military leadership philosophy — high standards, clear expectations, fair pay, and genuine autonomy for his team — as central to a smooth transition and rapid operational improvement.

Deal facts

sde ebitda: SDE ~$750k (target range stated during search)
revenue: $4.9m at acquisition; $5.6m year one; ~$6m projected 2022
financing structure: SBA loan + investor equity (Sam Rosati as lead investor); self-funded search with outside investors, majority ownership retained by guest
notes: Closed February 2021. SBA purchase-price cap of $5m stated as upper bound. Guest had essentially no personal capital; sourced investors via SearchFunder post. Business was off-market, sourced through investor's network.

Why this business

John wanted a business that was already on autopilot — absentee owners, management in place, and SDE around $750k so institutional buyers would largely ignore it. He chose express trailers (custom enclosed trailer manufacturing) because the deal came through his investor Sam Rosati's network, was in Tampa where he wanted to live, had two long-tenured VPs running day-to-day operations, and — despite being manufacturing — had minimal capital equipment exposure (handheld tools, assembly-line fabrication rather than heavy machinery). He had initially passed on it because he associated manufacturing with high capex, but reconsidered when he understood the fabrication-style model.

What's working

Two experienced VPs (one a 27-year employee, one the former owner's son) already running the business; guest stepped back and let them lead while he worked on the business
Eliminated unprofitable dealer channel (half of revenue) within the first month and redirected capacity to commercial accounts at 40-45% margins vs. negative margins on dealer trailers
Raised prices 30-35% across the board in line with input-cost inflation; commercial customers did not push back
Switched commercial accounts to annual stocking/forward-order programs, locking in production schedule a year in advance and creating recurring, predictable revenue
Labor model: hired fewer but better-paid hourly workers, set clear standards, gave wage increases to existing staff, brought military culture of clear expectations without micromanagement
No sales team or advertising needed — inbound demand from trade shows and word of mouth fills capacity; production board for 2022 nearly full by April
Regional quasi-monopoly in custom commercial trailer manufacturing for the southeast US; effectively no direct competitors in the niche
Low capex relative to perception of manufacturing — most expensive single piece of equipment is a ~$4,000 bandsaw; no heavy stamping or CNC machinery

What's hard

Input costs (steel, aluminum, tires) rose ~30% due to COVID supply-chain pressures, though guest was able to pass through all increases
Due diligence did not fully reveal which revenue stream was profitable and which was losing money — the PE firm that preceded him walked away for this reason; guest took it as an opportunity rather than a red flag
Could not meet one of the two key VPs until the day before closing — significant leap of faith given the whole thesis depended on retaining both
Guest acknowledges the story sounds almost too easy and worries it sets unrealistic expectations for other searchers

Notable quotes

I owned the company, you guys run it. You guys have been running it, you're going to keep running it.

We are losing money on every trailer that sells to a dealer and making great money on all the business account trailers. So it was as easy as: well, let's just stop doing what we're losing money on and do more of what we're making money on.

I took over like a battalion command of rock stars that have been held back by leadership. It's easy to be a standout commander when all you do is say okay, you tell me what you need, I'll give it to you, and I'll protect you from everybody outside the company.

I don't care about revenue at all. I care about the margins. If we can make two million dollars a year but do two million in EBITDA, that's a better year than doing growing to twelve million in revenue and still only doing 750 EBITDA.