Chris Munn·May 16, 2022

Acquiring a Business in Florida, Living in California

Chris Munn is a Detroit-raised, Howard University-educated finance professional (hedge fund, corporate M&A at an oil pipeline company) who acquired a commercial cleaning and specialty floor maintenance business in Tampa/Pinellas County, Florida for $800k (approximately $250-260k SDE) while living in Los Angeles. He runs the business semi-absentee from California, relying on a strong general manager who handles all day-to-day operations. The business generates recurring revenue from nightly commercial cleaning contracts and reoccurring revenue from higher-margin specialty floor work (stripping and waxing), which carries 50%+ margins versus sub-5% for commodity cleaning. His biggest lesson was that he should have bought bigger from the start — the business was too small to support a full management layer — and at the time of recording he had a second cleaning business of about 3x the size under contract to address this. Chris also speaks candidly about experiencing racial bias in SBA lending and is actively working to raise awareness of ETA among underrepresented communities, including through weekly office-hours calls on Twitter and plans to engage Howard University's entrepreneurship program.

Deal facts

purchase price: $800k
multiple: ~3.1x SDE
sde ebitda: SDE $250-260k
revenue: just over $1m
financing structure: SBA loan (implied; bank was heavily involved and challenging)
notes: Second acquisition under LOI at time of recording: same industry (commercial cleaning), same geography (Tampa/Pinellas County), approximately 3x the size of first deal (~$3m revenue). First business acquired from California while business operated in Florida.

Why this business

He wanted recurring revenue and something somewhat recession-resistant. Commercial cleaning with specialty floor work offered reoccurring revenue from floor maintenance contracts plus nightly cleaning, which felt more comfortable than D2C or something completely foreign to him. He was looking in the $700k-$1m enterprise value range and wanted a cash-flowing asset similar to the model he had learned in corporate M&A.

What's working

Strong general manager on the ground in Tampa who runs day-to-day operations including hiring, firing, and compensation negotiations, enabling semi-absentee ownership from California
Specialty floor work (stripping and waxing) generates 50%+ margins and differentiates from commodity nightly cleaning; it is harder to replicate and serves as an upsell once inside a client's facility
Recurring and reoccurring revenue base from both nightly cleaning contracts and quarterly floor maintenance
Asynchronous communication culture he built with the team reduces need for constant presence
Prior experience running apartment buildings remotely in Michigan gave him confidence to run the business remotely from California
Acquisition growth strategy: planning to 4x business size via a second acquisition in the same industry and geography

What's hard

Business was too small at acquisition ($250k SDE) to support a true management layer, making it difficult to fully step back; he says he would have bought bigger
COVID hit right after acquisition, requiring focus on stabilization rather than growth
Bank financing was very difficult; he experienced pattern-matching bias as a young Black man seeking SBA financing, with irrational questions and skepticism despite his Wall Street background
Nightly commercial cleaning has very thin margins (under 5% at large scale); floor specialty work is the key margin driver but not available every night
Key-employee risk: the GM is central to everything; losing her would be very damaging
Running a business remotely from across the country (California to Florida) on the first acquisition required significant confidence and carries real operational risk
Organic growth is slow in recurring-revenue cleaning because customers are locked into existing contracts

Notable quotes

I should have bought a bigger business like that's without a doubt.

When sometimes when people see especially when my apartment building a young African-American male in his 20s coming in and saying hey I want to buy a business I just don't think that — people pattern match. The smartest people in the world pattern match, so when they see something that comes in that doesn't match the pattern it's like ah no this isn't right.

I may have to do — John may have to do X, I may have to do X plus Y, and then that might get us to the same place. But you know I'm willing to do that.

There are kids out there like me or adults out there like me who wouldn't have known anything about that. I learned all that because I went to college and like that's a blessing that I had but you know everybody doesn't know that.