Mike Okhravi·November 13, 2023

Buying 2 Businesses at Once as a First-Timer | Mike Okhravi Interview

Mike Okhravi left a 10-11 year tech career (most recently at Asana, laid off in early 2023) and, after briefly considering a search fund accelerator and rejecting it over the equity split, bought two unrelated small businesses within months of each other: a Southwest Florida garage-floor epoxy coating company for $495k (roughly 1.25x SDE, financed via SBA) and a towing company 3 hours away for $550k that looked unprofitable on paper because the prior owner pocketed impound cash off the books. When the towing deal's SBA financing collapsed late in the process, he restructured it with seller financing covering 82-83% of the price. Both deals were sourced by hunting for 'motivated seller' signals in BizBuySell listings and screening for low multiples rather than 'safe' categories like HVAC. The transition was rocky -- an uncooperative epoxy seller withheld information and nickel-and-dimed him post-close, a key tradesman turned out to be running a side business, and the towing seller's records were informal -- but Mike leaned on proxies like tax-verified profits, Google review volume, and hard asset value (towing equipment alone was worth nearly the full purchase price) to get comfortable. A year one into ownership, he's splitting time between the two businesses, delegating operational tasks to existing staff, investing in growth (marketing spend, a new yard for towing) despite short-term margin compression, and planning to add management layers, expand the epoxy business geographically, and eventually offer key employees equity to retain them.

Deal facts

purchase price: Business 1 (garage floor epoxy coating): $495,000; Business 2 (towing company): $550,000
multiple: Business 1: ~1.25x SDE; Business 2: ~1.8x SDE (reported)
sde ebitda: Business 1: SDE $413,000 (reported/tax return); Business 2: SDE reported on tax returns only $30-50k but Mike backed into an actual SDE of roughly $300,000 from cash the seller was pocketing off the books
revenue: Business 1: about $1,000,000/year; Business 2: roughly $800,000/year (approximate, seller's records were informal)
financing structure: Business 1: SBA loan. Business 2: seller could not get SBA financing (bank's new head of underwriting killed the deal after 3.5 months); restructured as $100k cash from buyer plus seller financing of the remaining ~82-83% of the purchase price on aggressive 4-year terms
notes: Business 1 seller charged Mike an extra $15,000 post-closing for equipment (vacuums, diamond grinders) he claimed was excluded from the asset purchase agreement, despite Mike believing he'd bought all business assets. Business 2's underlying equipment (tow trucks, yard equipment) alone was estimated worth $250-300k, nearly covering the full purchase price. Combined SDE across both businesses was roughly $700k on a combined purchase price of about $1.045m.

Why this business

Mike wanted cash-flowing businesses with low purchase multiples rather than the 'safer' higher-multiple categories (like HVAC) that leave little debt-service cushion. He built a spreadsheet of ~10 industries he could see himself in, screened business-for-sale listings for signs of motivated sellers (seller financing offered, retirement, informal/harsh listing language), and found both deals that way. The epoxy garage-flooring business appealed because of its rock-bottom multiple (~1.25x SDE), consistent tax-verified profit, minimal admin workload, and an immaculate online reputation (180+ five-star reviews). The towing company appealed because it looked 'distressed' on paper (tax returns showed only $30-40k profit since the owner pocketed cash from impound releases), but Mike saw the equipment alone was worth nearly the full purchase price, the seller was financing 82-83% of the deal himself (skin in the game), and government/insurance towing contracts meant demand was essentially guaranteed rather than something he'd have to generate.

What's working

Both businesses have simple, low-complexity management once you strip out the seller's unnecessary paperwork and processes -- delegating scheduling, billing, and payroll to existing staff lets Mike split time between two businesses 3 hours apart
Towing has near-guaranteed repeat demand through police, insurance (Geico, Allstate), and motor-club contracts, so the business doesn't require active demand generation the way the epoxy business does
Continuing to invest in marketing (rebuilt website, digital marketing via Everest/podcast sponsor) through a slow season paid off with the epoxy business's best two-week sales stretch ever ($75k) shortly after the interview
Buying deeply discounted/off-multiple 'ugly' deals (1.25x SDE epoxy business; a towing business that looked unprofitable on paper) gave him a cushion and upside that a 'clean,' fairly-priced deal wouldn't have
Testing a two-week absence (baby-moon trip) while trusting employees to run both businesses went fine, suggesting decent delegation is already in place
Retaining and building an equity-partner path for key employees (e.g., the epoxy sales lead) to prevent departure and align incentives

What's hard

The epoxy seller was evasive pre- and post-close: wouldn't disclose the jobs booked on the schedule, wouldn't let Mike talk to employees, gave only vague payroll figures, and squeezed him for an extra $15,000 for equipment post-closing that Mike believed was already included in the deal
A key skilled tradesman at the epoxy business had started a competing side business without disclosure, which Mike only discovered from a coworker after closing -- a risk he now says should always be diligenced
The epoxy business came in far below expected volume in the first month (seasonal slowdown, one employee had just quit, PPC ads got turned off) versus the 6-8 week backlog he was told to expect, causing real anxiety
The towing deal's original bank financing fell through after 3.5 months when a new head of underwriting rejected it, forcing a last-minute renegotiation into seller financing
Running two businesses 3 hours apart means constant trade-offs: strategic priorities get delayed a week because attention is split, and sometimes both businesses have 'fires' simultaneously
Both businesses are in a margin-compressed post-acquisition 'J-curve' period as Mike adds a manager layer, invests in marketing, and pays himself a below-market $48k salary at each business while learning the operations
Diligence on both deals was necessarily 'shitty' by his own admission -- no formal QoE, reliance on proxies (tax returns, Google reviews, bank statements, seller's informal spreadsheets) because paying for full diligence didn't make sense on sub-$1m deals

Notable quotes

I can start making money today like there's all these businesses for sale like why do I have to go through this thing

I had that sense the whole time through... he wouldn't give me straight answers... that's not good enough.

I would say in the future diligence the employees, it's a non-negotiable, it's a deal breaker otherwise because especially in something with a skilled trade craft, those guys leave, they are really hard to replace and I have had so many headaches around it.

There's no blueprint on how to do anything, there's only just guidelines and what people have done before that's based on their analogies and their biases, but you can make it work if that's what you want.