First Acquisition in March, $200m by Year End | Jordan Dubin Interview

Jordan Duban, along with his partners Joe Delaney and Sean Slazak, is rapidly building a significant business in the garage door repair industry, targeting $200 million in revenue and $30 million in EBITDA within their first year. Their strategy involves acquiring and partnering with key players in a fragmented market, leveraging economies of scale, and maintaining local brand presence while unifying back-office operations. Inspired by industry pioneers like Tommy Mello of A1 Garage Door, they emphasize authentic relationships and strategic integration, supported by a $40 million equity raise and additional debt facilities. Their success is attributed to a well-crafted thesis, strategic timing, and strong partnerships.

• Jordan Duban's journey began during his sophomore year of college when he interned for Matt Pearlman and Alex Sloan, who were building a portfolio of Burger King franchises.
• This experience was pivotal as it inspired Jordan's interest in entrepreneurship and business acquisition.
• The relationships and bonds formed with sellers and operators were more impactful than the financial engineering aspect.

"I loved this idea of meeting with sellers all across the US, forming relationships, forming bonds, and then building something together."

• This quote emphasizes the importance of relationship-building in Jordan's business philosophy, which continues to be a core aspect of his approach.

• Jordan, along with his partners Joe Delaney and Sean Slazak, gained significant experience at El Catterton, focusing on buy-and-build strategies.
• Their time there provided them with a comprehensive understanding of financial engineering and business rollups.
• The hands-on experience with portfolio companies allowed them to learn the intricacies of managing and integrating businesses.

"We learned so much about this investing style, and that was really where we learned kind of the financial engineering side of it."

• This illustrates the critical skills and knowledge gained at El Catterton, which laid the foundation for their future endeavors.

• The decision to create Guild was driven by the recognition of a gap in the market where lower middle-market private equity firms were not willing to operate.
• They identified an opportunity to create scale by acquiring smaller businesses that were overlooked by larger firms.
• The team was motivated by the potential to apply their learned playbook in a niche market.

"There are all these lower and middle-market private equity firms who are paying high premiums... but they're not the ones going and starting them from scratch."

• This quote highlights the strategic gap that Guild aimed to exploit by focusing on smaller, undervalued businesses.

• Guild's acquisition strategy is characterized by flexibility and a willingness to consider businesses outside conventional thresholds.
• They have successfully acquired businesses with varying levels of EBITDA, demonstrating adaptability in their approach.
• The emphasis is on identifying companies with growth potential, regardless of their current financial metrics.

"We've acquired now two businesses that do between $400,000 and $500,000 of EBITDA that have all reached $750,000 plus EBITDA."

• This statement underscores the importance of looking beyond immediate financials to recognize long-term growth opportunities.

• The decision to focus on residential services was influenced by the potential for industrial logic supporting consolidation.
• Residential services, particularly HVAC, plumbing, and electrical, offered non-discretionary demand and strong cash flow characteristics.
• Guild sought to find the next frontier in residential services that wasn't saturated with private equity competition.

"There was real industrial logic that supported consolidation... this does not just apply for HVAC plumbing and electrical but in fact, this speaks more broadly to the residential services category as a whole."

• This quote reflects the strategic rationale behind targeting residential services, emphasizing the scalability and integration benefits.

• Jordan Duban's journey from an impressionable intern to a successful entrepreneur was driven by a combination of strategic vision, relationship-building, and a willingness to take calculated risks.
• The experiences and insights gained at El Catterton and through early influences were instrumental in shaping Guild's approach to acquisitions and growth.
• Guild's success is attributed to its flexible strategy, focus on residential services, and the ability to identify and act on market opportunities that others overlook.

• Entering a new market requires identifying categories with precedent transactions to ensure a proof point exists.
• A best-in-class scaled business should be studied to understand industry benchmarks and practices.
• Learning from existing successful businesses is crucial for strategic planning and execution.

"It's all great and good to say hey we're going to go into this category where no private equity firm is, and find the next frontier, but I think you have to be very intentional that the next frontier has to have some sort of proof point."

• Emphasizes the necessity of a precedent to guide new market ventures.

"You want to find a category that doesn't have a million private equity firms running around, but yet there's one precedent transaction."

• Suggests targeting markets with limited competition but proven success.

• A1 Garage Door, founded by Tommy Melo, grew to $100 million in revenue through organic growth.
• The company was sold to the private equity firm, the Cortech Group, which aimed to supplement growth through mergers and acquisitions (M&A).
• A1's success was partly due to introducing innovations from other industries, such as digital CRM systems and branding techniques.

"Tommy Melo... founded this Garage Door Company A1 Garage Door... and he organically grew it to be about a hundred million of revenue."

• Highlights the significant organic growth achieved by A1 under Tommy Melo's leadership.

"He introduced a lot of things into the industry that he saw in HVAC and plumbing and landscaping that previously no one in the industry had been doing."

• Acknowledges Melo’s role in innovating the garage door industry.

• The garage door industry was identified as a new frontier due to its fragmentation and growth potential.
• The industry was largely untapped by private equity, with significant opportunities for consolidation and scale.
• The total addressable market was estimated at $13 billion for residential and $20 billion for commercial sectors.

"You had a category that was 92% fragmented, had roughly 15,000 independent garage door repair companies."

• Illustrates the high level of fragmentation in the industry, signifying consolidation potential.

"The category was set to grow 7 to 9% over the next five years."

• Indicates the growth potential of the garage door industry.

• Consolidation allows for economies of scale, particularly in procurement and operational efficiencies.
• Larger enterprises can achieve better pricing and cost savings compared to smaller, fragmented companies.
• The garage door industry offers substantial cost reduction opportunities through scale.

"As you scaled up... you could go to the manufacturers that provided the doors for you... and realize procurement savings."

• Describes the cost benefits of scaling in the garage door industry.

"We're talking hundreds of thousands of dollars per company in savings."

• Quantifies the potential savings from consolidation.

• Lack of existing large-scale platforms in the garage door industry posed a challenge.
• The strategy involved rapidly acquiring prime candidates to create a moat and prevent competition.
• Consideration of future saleability and value creation for potential buyers is crucial.

"There's no platform of scale out there... you really needed to go in and start it from scratch."

• Highlights the challenge of building a large-scale platform from the ground up.

"We have to move fast and we have to move now because there are 10 to 15 prime candidates out there."

• Emphasizes the urgency in acquiring key companies to establish market dominance.

• Planning for an exit involves reverse engineering the business to appeal to future buyers.
• Important factors include maintaining a low percentage of new construction exposure and standardizing operations.
• Growth levers for future buyers include organic growth, greenfield strategy, and tuck-in acquisitions.

"We almost made like a fake sheet... of the eventual future SIM of Guild and said what do we want this to look like."

• Describes the strategic planning involved in preparing for a future exit.

"We want new construction to be sub 10%... everyone to use the same financial ERP system."

• Lists the criteria set to ensure the business remains attractive to future buyers.

• Jordan and his partners initially aimed to reach $20 million in EBITDA by 2028, but are on track to hit $30 million by the end of their first year.
• The focus was on identifying hot market categories with significant growth potential and executing rapid rollups.
• Timing and speed are crucial in capturing market opportunities before they become saturated.

"Jordan and his two partners were aiming to get to $20 million in EBITDA in five years from 2024 through 2028... they're on track to hit 30 million by the end of the first year."

• Demonstrates the rapid success and aggressive growth strategy of Jordan and his team.

"I think it's a testament to how quickly the windows of opportunity open and close in these categories... speed if you're trying to create scale in these super Niche hot categories is paramount."

• Highlights the importance of timing and speed in capturing market opportunities.

• Garage and Tree Servicing were identified as potential categories, with Tree Servicing initially being attractive due to low competition.
• The importance of selecting categories with a large total addressable market and potential for growth was emphasized.
• The shift towards white-collar services like accounting and legal due to AI advancements was noted.

"We narrowed it down to two: garage and Tree Servicing... Tree Servicing right now is a really hot category."

• Reflects the initial focus on niche market categories with growth potential.

"Everyone wants to pile into white-collar services categories now... especially when you have the potential of AI removing 50% of the workforce."

• Indicates the shift towards sectors that benefit from technological advancements like AI.

• The strategy involved direct outreach, including phone calls and handwritten letters, to establish contact with business owners.
• Emphasis was placed on personal interactions to build trust and relationships.
• Authenticity and transparency were key components of the pitch to business owners.

"We would call people until they picked up, and we would write handwritten letters in large craft envelopes."

• Illustrates the unconventional and personalized approach to sourcing acquisitions.

"One dinner over a couple of beers with an owner is the equivalent of 6 to 8 Zooms... the trust you build."

• Emphasizes the value of personal interactions in building trust and securing deals.

• The pitch to business owners was aligned with the pitch to investors, focusing on shared goals and growth potential.
• Business owners were positioned as partners in building a larger platform rather than sellers.
• The approach was to maintain local brand identity while standardizing back-office operations for efficiency.

"Our pitch to owners was the same pitch to investors... you're part of this journey, this is a startup."

• Demonstrates the alignment of interests between business owners and investors.

"We're not going to do any type of rebranding... but we're still going to maintain the localized brand, the localized culture."

• Highlights the strategy of preserving local identity while achieving operational efficiency.

• Integration of back-office systems was crucial for realizing economies of scale and operational efficiency.
• Uniformity in enterprise-facing operations was prioritized, while consumer-facing aspects were left to local discretion.
• The diverse nature of markets across the country necessitated a flexible approach to operations.

"Integration is hypercritical for these platforms... that's how you really tap into the economies of scale."

• Stresses the importance of integration in achieving operational efficiency.

"When it comes to the consumer-facing nature of the business... we allow the owners and the businesses to continue doing what they've been doing."

• Reflects the balance between standardization and local autonomy in operations.

• Brand equity is crucial in maintaining consumer recognition and loyalty, especially in direct-to-consumer residential services.
• Preserving brand equity is not merely about emotional attachment but about leveraging accumulated value.

"Real brand equity is real, and it's not just, 'Hey, we're not going to change the brand because the owner has an emotional attachment to this logo he created on Microsoft Paint five years ago.'"

• Brand equity translates to consumer trust and recognition, which are vital for business success.

• Initial capital raised was $35 million, with an additional $5 million later, totaling $40 million in equity.
• An institutional debt facility from a private credit firm in New York provides an additional $85 million in dry powder.

"We raised about $35 million upfront and then put it all to work very quickly and have since taken on an additional $5 million of equity."

• The financial strategy focuses on rapid deployment of capital to support growth and acquisitions.

• There are two types of acquisitions: partnership beachhead transactions and tuck-in acquisitions.
• Partnership beachhead involves taking a majority stake while allowing original owners to retain a minority stake.
• Tuck-in acquisitions involve buying smaller businesses to integrate into larger platforms.

"We want to take a majority stake in the business anywhere between, call it, 70 to 80%, and then we want you to roll, we want you to retain 20 to 30%."

• The strategy ensures business owners remain invested and motivated to grow their businesses post-acquisition.

• The strategy involves partnering with 15 to 20 uniquely scaled, sophisticated partners across the U.S.
• The approach is to create regional platforms rather than a single national platform.

"We're not creating one platform; we're creating 15 to 20 regional platforms."

• This strategy allows for both organic growth and growth through mergers and acquisitions (M&A).

• Market selection is based on finding large players in attractive markets rather than simply targeting the largest cities.
• The focus is on markets with existing scaled players to serve as beachhead partners.

"We run all kind of the MSA data and figured out, okay, these are the best markets for a garage door company."

• The strategy involves building around successful businesses in viable markets.

• The offer includes upfront liquidity and the opportunity for further growth and profit sharing.
• Owners are incentivized with the potential for a higher valuation at the time of a future sale.

"You will get a 'second bite of the apple'... you're selling off of a mid to high teens multiple."

• This structure aligns the interests of original owners with the acquiring company for long-term success.

• Relationship-building is crucial in acquisitions, beyond just financial offers.
• Owners are more likely to join a platform they believe in and see potential for future success.

"The offer that you're making, it being compelling to the owners, has to be a contributor to how fast you moved."

• Emphasis on long-term vision and partnership over purely transactional relationships.

• Success attributed to a combination of luck and having the best partners.
• Strong partnerships and team commitment are key to achieving rapid growth.

"50% of the equation is luck and 50% of the equation is I have the best partners in the world."

• Organic growth and strategic acquisitions both play roles in the company's rapid expansion.

• The pace of acquisitions is facilitated by a strong partnership and division of roles among team members.
• Utilization of outsourced resources for legal and financial diligence supports the acquisition process.

"I'm on the road probably four to five days a week without fail, they are not, but they are in the office most days past midnight closing all these deals simultaneously."

• The team's diverse skills and dedication enable the execution of complex transactions efficiently.

• The goal is to create the largest garage door company and a leading residential services platform in the U.S.
• The company aims to continue its trajectory of growth and industry leadership.

"I think our ultimate goal is to create the single largest garage door company in the United States."

• The vision includes expanding both the scale and scope of the business within the industry.

• Luck plays a role in timing and external factors beyond control.
• Despite strategic planning, uncontrollable elements can influence outcomes.

"The luck is in the timing, the luck is in, you know, other parties who probably had a similar thesis to us not ultimately deciding to act on it months before us."

• Acknowledgment of the interplay between careful strategy and fortunate circumstances in business success.