Jordan Novgrod·November 22, 2022

Why I quit my Job and Bought a Business | Jordan Novgrod Interview

Jordan Novgrod is an electrical engineer who spent 17 years at Johns Hopkins Applied Physics Lab before losing his job over a vaccine mandate in early 2022. Introduced to personal finance through Rich Dad Poor Dad, he sold his home equity, deployed his 401k via ROBS, and took an SBA loan to buy a metal fabrication and machine shop near his home in West Virginia — found on Biz Buy Sell — within six months of beginning his search. The business had SDE over $800k on $2.2m revenue, priced at just over 3x SDE, with roughly 40-50% repeat revenue from water treatment plant infrastructure customers. The main challenge is the lack of a management layer (the seller had tried and failed to hire a GM, which prompted the sale) and net-90 payment terms creating working capital strain. Three months in, Jordan has retained all nine employees by taking each to lunch individually on day one, sharing that his entire life savings was on the line, and committing to no major changes for 90 days. He views acquisition entrepreneurship as a viable path for middle-class people — without startup capital or an MBA — to build generational wealth.

Deal facts

purchase price: roughly 3x SDE (~$2.4m implied)
multiple: a little over 3x SDE
sde ebitda: SDE over $800k
revenue: $2.2m
financing structure: SBA loan + ROBS (401k rollover) + equity from house sale
notes: No outside investors. Jordan sold his house and used the equity, deployed retirement savings via ROBS, and took an SBA loan with personal guarantees on everything including the lease. Nine employees. Business is a metal fabrication / machine shop serving water treatment plants and other infrastructure customers.

Why this business

Jordan had management experience over a small machine shop at Johns Hopkins Applied Physics Lab and liked building things. The business fit his hands-on nature and engineering background. He broadened his search geographically to everything commutable within 90 minutes and found this manufacturer on Biz Buy Sell; he and his wife both immediately felt it was the right one. He also liked the infrastructure / water treatment customer base as a stable, non-cyclical project pipeline.

What's working

Strong seller-buyer chemistry — the two-hour intro meeting ran six hours and Jordan put in an offer within two days
Clean financials with no shady add-backs, priced right at just over 3x SDE
Successful customer relationship transition — joint site visits with the seller; no customers have walked
Employees retained — took each employee to lunch individually on day one to build rapport; no turnover three months in
Roughly 40-50% of revenue is repeat/reoccurring work from returning customers, providing a stable base
High margins (~35-40% SDE/revenue) reflecting a lean, well-run operation
Clean, methodical paper-based systems that Jordan is incrementally digitizing without disrupting operations
Former owner still working in the business, helping transition relationships and push into the field for sales

What's hard

No management layer — seller was doing everything; Jordan must fill that role and will need to hire a GM eventually (seller had tried and failed to hire one, which is partly why he sold)
Net-90 payment terms from some customers create a long working capital cycle for a manufacturer
Project-based revenue creates ebbs and flows in workload; Jordan wants to build backlog before making hires
Zero marketing when acquired — entirely relationship-driven, so growth requires in-person business development rather than scalable outreach
Day-one employee morale was rocky — employees were blindsided and visibly upset by the ownership change
Business is still almost entirely paper-based (handwritten checks, fax machines, analog phone lines)

Notable quotes

I bought the business because of them — it was very much a good business because they were providing the value and doing the work.

I let them know I had my entire life savings tied up into it.

When I discovered entrepreneur acquisition I just realized that there was a path there to build real wealth — by putting capital on the line, by buying a cash flowing asset, I think it's possible to step out of the middle class.

I didn't come from money — I worked my whole life, I started working when I was six.