Sajama Mitta·August 3, 2023

How to Buy a B2B Consulting Business | Sajama Mitta Interview

Sajama Mitta, an IIT Bombay-trained engineer who spent 15 years as a quantitative investor for major pension funds (Calpers, CPPIB, Norwegian sovereign fund), acquired CDMS (Chemical Data Management Systems), a 35-year-old environmental health and safety compliance consulting firm in California with 15 employees, 2 locations, and hundreds of industrial clients. The business provides ongoing regulatory compliance services — covering air quality, stormwater, hazardous waste, fire safety, and more — to manufacturing and distribution facilities that cannot afford in-house EHS expertise, and operates primarily on recurring subscription contracts. Sajama was attracted to it because, unlike typical consulting firms, CDMS had built genuine process infrastructure and SOPs under its engineering-minded founder, giving it real ongoing-concern value. She used SBA financing and self-funded the equity, deliberately avoiding outside investor capital to preserve the space to learn and make mistakes. In her first roughly two years as operator, she achieved 15% revenue growth while culling low-margin one-off remediation projects and investing in team stability, benefits, and systems; she is now pursuing both organic growth through service quality and word-of-mouth, and inorganic growth via acquisitions of other retiring EHS firm owners in the highly fragmented California market.

Deal facts

sde ebitda: under $2m EBITDA (stated search criterion)
financing structure: SBA loan + own equity (self-funded search)
notes: Business: CDMS (Chemical Data Management Systems), environmental health and safety consulting company in California, 35 years old at acquisition, 15 employees, 2 locations, hundreds of clients throughout California. Founded by a father-daughter team who were retiring.

Why this business

Sajama wanted a business where her quantitative and systems-thinking background would be useful, in a geographically proximate location (Bay Area/California). She was drawn to CDMS because it had built genuine process infrastructure and recurring subscription-based revenue — unusual for a consulting firm — making it more like an ongoing concern than a typical principal-dependent practice. The engineering mindset of the original founder had created documented SOPs and systems, and the fragmented industry presented a roll-up and organic growth opportunity she found compelling.

What's working

Recurring subscription-based compliance service contracts with hundreds of industrial clients throughout California — the business has real ongoing-concern value unlike typical consulting firms
Process infrastructure and SOPs built by the founding engineer give the business continuity independent of the original principals
15% revenue growth since acquisition, with a deliberate shift toward higher-quality recurring revenue and away from lower-margin, high-headache one-off remediation projects
All employees who wanted to stay have stayed; improved benefits and systems have strengthened team retention
Strong client relationships — received unsolicited client email crediting CDMS for six consecutive months of zero accidents at a facility
Industry fragmentation in California creates inorganic growth opportunity: many small EHS firms whose owners are ready to retire

What's hard

First year saw no revenue growth — time was spent removing low-quality revenue (one-off remediation/hazardous cleanup projects, roughly 10-15% of revenue but ~25% of headaches) rather than adding new revenue
Technology debt: the company's databases and scripts needed modernization; Sajama's quantitative background hasn't yet been fully applied because higher-priority operational issues came first
Cultural change is slow — any changes to a 35-year-old company's culture or processes take far longer than anticipated
As a non-technical-in-EHS operator, Sajama had to learn an entirely new technical domain on the job, though she viewed this as a positive challenge rather than a problem

Notable quotes

I found what really motivates me, what I find most comfortable, is to think about my team and to think about all these small teams all over California and what are their — an employee who joins any environmental health and safety consulting company — what are their long-term goals and prospects. If we can build a company where all of these employees have a bright future, they have several years of career growth, lots of learning, increase in compensation, and interesting problems to solve, then all the other pieces will fall into place.

When a company is moving in one direction it does keep moving in that direction — so it's good and bad. Any changes to it will be hard won and take a long time. If you have a company with a certain culture and you are looking to change the culture it's going to take a long time. At the same time, if customers like that company they're going to continue to like that company for a long while.

We recently received an email from a client which said, 'Thank you, we have had six months of no accidents in our facility and CDMS you played a critical role in making that happen.'

I wanted space and time for me to really understand the industry well and figure out some of the things that I don't know about, because I'm new to operating a small company. Operating a small company is very different from working for the kind of companies that I've worked for before. So it was important for me to be independent right in the beginning.