Shane Ehrsam·November 29, 2022

Acquired a Business After 6 Month of Research | Shane Ehrsam

Shane Ehrsam grew up watching his father run a successful Home Care franchise, spent 11 years in ascending corporate management roles (up to 750-person teams and $120m P&L), and was laid off in September 2021 — the catalyst that sent him into a full-time, self-funded search. He completed the Acquisition Lab cohort 15 in November 2021 and launched a systematic broker outreach campaign of 400+ Texas-based brokers in January 2022, cold-calling 20-30 contacts per day. Within his first month of outreach he connected with a broker who had just listed North Texas Trailers, a three-location trailer dealership in the DFW Metroplex founded in 2007. He closed the acquisition in June 2022 — six months after launching — at a $4 million purchase price structured as 80% SBA loan, 10% seller note, 5% fully-stood-by seller note (counting as equity per SBA), and 5% buyer equity. The deal was a stock purchase (not asset purchase) at the seller's request for tax reasons, which exposed Shane to a pre-closing slip-and-fall lawsuit served literally the day before close. The business had normalized SDE of ~$900k over 2018-2020, spiking to $1.7m in 2021 from COVID supply-chain tailwinds; Shane valued on the normalized figure. By late 2022, service revenue had grown 15% while new trailer sales dipped ~6%, leaving the business roughly flat year-over-year — beating the 5-10% revenue decline the broker had conservatively projected.

Deal facts

purchase price: $4m
sde ebitda: SDE ~$900k (2018-2020 avg); $1.7m (2021)
financing structure: 80% SBA loan + 10% seller note + 5% seller note (full standby) + 5% buyer equity
notes: Stock purchase (not asset purchase) due to seller tax preference. Business: North Texas Trailers, DFW area, 3 locations. Founded 2007. 2021 SDE ~$1.7m due to COVID tailwinds; normalized SDE ~$900k. Buyer's father provided short-term personal loan to fund equity injection (repaid within 4 months). Pre-qualified by SBA lender at $2.5m.

Why this business

Shane was attracted to North Texas Trailers because it had strong, proven cash flow averaging ~$900k SDE over 2018-2020 (well within his target range of $600k-$1m), three locations diversifying geographic and operational risk, extremely low customer concentration (largest customer was 1% of revenue), loyal long-tenured employees (average ~8 years), and favorable economic tailwinds in the fast-growing Dallas-Fort Worth market. He also saw an existing e-commerce storefront for parts as an untapped growth opportunity. The business felt like a high-quality, well-run operation with infrastructure already in place, which aligned with his preference for buying a business with existing cash flow over starting a franchise from scratch.

What's working

Service revenue grew 15% in 2022, offsetting a ~6% decline in new trailer sales as supply chain normalized
Extremely low customer concentration — largest customer represented just 1% of 2021 revenue
Long-tenured, loyal employee base averaging ~8 years; transition went smoothly with no major defections
Three DFW locations provide geographic diversification and broad market coverage across the Metroplex
DFW is the #1 trailer market in the country with strong population growth Tailwinds supporting demand
Existing e-commerce storefront for parts represents a future growth lever not yet fully capitalized on
Strong seller relationship; ongoing landlord relationship with prior owners who still own the property

What's hard

Inherited a pre-closing lawsuit (slip-and-fall from 2020) served the day before closing because deal was structured as a stock purchase — a concrete illustration of stock-purchase liability risk
New trailer sales facing headwinds in late 2022 as supply chains normalized, inventory built up, and demand softened — the reverse of the COVID-era dynamic
Managing 19 employees across 3 locations as a first-time small business owner requires wearing every functional hat simultaneously (sales, HR, finance, operations)
E-commerce parts storefront is an identified growth opportunity but Shane has not yet had bandwidth or capital to invest meaningfully in it
Lean headcount means Shane is looking to add staff to take non-selling work off his sales team's plates
Paid a premium for 2021 peak earnings year; normalized SDE was used for valuation but uncertainty about how long COVID tailwinds would persist was a real negotiation challenge

Notable quotes

I burned the boats — it was a classic burn the boat situation a hundred percent.

Why do that when I can buy a business that already has cash flow? If I buy the right business I can pay myself salary hopefully close to what I was making prior — I've already got all the infrastructure built in, I've already got all the employees, I've got product market fit — that just made too much sense to me.

A day before we close the business there was a lawsuit served — I'm confident that we're in the right — it's kind of the basic slip, trip and fall — and that's what we have insurance for — but this occurred in 2020. June 2nd of 2022 was when the lawsuit was served and we closed on June 3rd.

I love it. I don't know how I didn't do this sooner. It comes with a lot of flexibility, I have a great team around me, and I think that's really key to any successful business no matter the size — having a great team around you.