Joseph Cruz·April 6, 2026

"Life is Just Brighter" in a $1.2m Distribution Business | Joseph Cruz Interview

Joseph Cruz, a 34-year-old finance professional from Chicago with 8 years at Fifth Third Bank covering industrials, bought A&A Equipment Supply — a 40-year-old sewer and water construction supply distributor in Bensenville, Illinois (adjacent to O'Hare) — in December 2024 for $536k (roughly 2.2x SDE of ~$245k) using an SBA loan, seller note, and $75k equity. The business had $1.2m revenue, 6 employees, and 40-45% gross margins due to its 'oh business' model — contractors buy from A&A when they underestimate job materials, making it a high-margin last-mile convenience supplier. Joseph was drawn specifically by Chicago's massive infrastructure tailwinds (400,000 lead lines being converted over 50 years) and his desire to become a genuine industry expert rather than just a financial advisor. His first year was marked by the GM announcing retirement pre-close (addressed via an earnout side letter), the brutal discovery that all vendor and product knowledge was undocumented, and a difficult seasonal cash crunch after buying in December. Key wins included a bolt-on acquisition of a one-man mechanic shop at close that drove ~200% service revenue growth, growing total revenue to $1.5m, establishing daily stand-ups and SOPs, and repairing vendor relationships damaged by the prior owner's late payments. Joseph is now targeting $2m in year two, pursuing a $3.5m O'Hare contract, and plans to build a distribution and equipment repair platform through further acquisitions.

Deal facts

purchase price: $536k
multiple: ~2.2x SDE
sde ebitda: SDE ~$240-250k (marketed at $270k)
revenue: $1.2m at time of purchase; grew to $1.5m in first full year
financing structure: SBA loan $550k + seller note $55k + equity $75k; side letter earnout of $50k tied to revenue; $25k holdback
notes: Stock purchase (not asset) to preserve state agency distribution agreements (Illinois DOT, Illinois Tollway Authority). Working capital of $128k included in total uses (~$680k total). Earnout was structured as a side letter (not formally SBA-compliant) after GM announced retirement 2-3 weeks pre-close. Seller left $75k cash in operating account to cover holdback and earnout mechanics. Owner took no salary in year one.

Why this business

Joseph had spent his last 3 years at Fifth Third Bank covering industrials including distribution companies in the sewer and water infrastructure space (Ferguson Waterworks, Core & Main, Advanced Drainage). He was attracted to the tailwinds from the Infrastructure Investment and Jobs Act, Chicago's aging infrastructure (400,000 lead lines needing copper conversion — roughly 50 years of work), and the fact that the business was directly tied to water/sewer, an industry he believed would be around forever. He wanted to become an expert in an actual industry rather than just an advisor, and A&A was squarely in the category he had been targeting.

What's working

Highly differentiated gross margins of 40-45% vs. competitors at 25-30%, driven by the 'oh business' model — contractors come in when they've underestimated materials needed on a live job, making A&A a high-margin convenience source
Central location directly adjacent to O'Hare airport, serving contractors traveling north, south, and west through Chicagoland; O'Hare is the largest ongoing construction project in Illinois
40+ year business longevity with revenue consistently in the $1-2m range since the 1990s, surviving COVID with only 5-10% revenue decline
Bolt-on acquisition of a one-man mechanic shop in December 2024 at close, co-funded 50/50 with the seller; service revenue grew ~200% in year one and now represents the primary growth engine
Growing service/equipment repair side (3 mechanics now vs. 1 at acquisition) which carries ~65% margins at full wrench time and provides a winter revenue offset against seasonal construction slowdown
State agency contracts (Illinois DOT, Illinois Tollway) tied to the entity's tax ID — preserved by doing a stock purchase
Culture and leadership improvements: daily morning stand-ups, transparent communication, SOPs and vendor lists created from scratch, SharePoint for centralized documentation
Revenue grew from $1.2m to $1.5m in year one (25% increase); targeting $2m in year two with a $100k contract landed and a $3.5m 5-year O'Hare contract in progress

What's hard

GM announced retirement 2-3 weeks before close — required adding an earnout and mandating the seller stay 6 months post-close; forced Joseph to learn all operations rapidly in the first 3 months
Bought a seasonal construction business in December — the off-season (December through February is negative profit months) was emotionally difficult, especially with a newborn daughter
Prior owner had stretched payables to ~70 days actual vs. net 30 terms, damaging vendor relationships; the business had already lost one distribution line for a specific pipe product due to slow payments — a fact not discovered until post-close
750-1,000 SKUs with zero written-down documentation of vendors, products, or ordering processes; all knowledge was locked in the GM and owner's heads
Three trucks at acquisition — now only one functional; two have broken down requiring significant repair costs, creating potential claims against the holdback
Cash flow management in a working capital-intensive distribution business is extremely difficult: customers pay in 45-70 days but the timing is unpredictable; revenue was up 20% but cash on hand declined in year one
Growing commodity-based revenue is inherently price-competitive — contractors simply ask 'what's your price?' making it hard to package the full value proposition
Left a $400k/year finance career (base + bonus) to pay himself zero in year one; significant lifestyle adjustment required

Notable quotes

Everybody goes to the bathroom, everybody drinks water, and it's going to be around forever.

I knew that these businesses would sell two to three times. I definitely wanted to be on the lower end of that. I was pretty much looking at what was the DSCR coverage. I wanted to be at least two times.

Without the GM, it really forced me to learn everything about the business in three months. I would say it was a blessing in disguise just because it forced me to figure everything out.

The real unlock wasn't finding the perfect people. It was setting expectations, creating repeatable onboarding, giving autonomy while building checks, letting leaders lead.