Matt Pohl·June 10, 2024

2 Welders and a Shop... to $3.8m in Sales | Matt Pohl Interview

Matt Pohl and his wife Dawn — a husband-and-wife team in their mid-to-late 50s based in Denver — bought a two-welder commercial pipe welding shop in September 2021 for roughly $2 million ($900k for the business at ~3x SDE, $1.1m for the attached real estate), financed with a 25-year SBA loan. Neither owner could weld; their thesis was to apply the business-building methodology Matt had used to 10x the value of their prior class action administration company (Rew Wild Group), and to give their son a potential path to GM the operation. Dawn serves as CEO running day-to-day operations while Matt drives business development, estimating, and pricing strategy. Despite losing the original two employees within a year and surviving a harrowing $500k receivable dispute with a non-paying client, the business grew from a ~$900k revenue run rate to $1.5m in the first full year and $3.8m with ~$1m EBITDA in year two — essentially quadrupling top-line revenue in two years. Growth was driven by aggressively hiring and trialing welders on large projects (sometimes 20 at a time), protecting margins by passing on low-margin work, building team structure and culture uncommon in small trade shops, and Matt's focus on sales and business development. The episode also covers the challenges of project-based zero-backlog revenue, key-employee risk in a highly skilled trade, cash flow gaps at acquisition, and the emotional demands of blue-collar business ownership on a white-collar couple.

Deal facts

purchase price: ~$2m total (~$900k business + ~$1.1m real estate)
multiple: ~3x SDE (business only)
sde ebitda: SDE $300k-$400k at acquisition; ~$1m EBITDA at $3.8m revenue
revenue: $800k-$1.1m at acquisition; grew to $1.5m (year 1), $3.8m (year 2)
financing structure: SBA loan, 10% down, 25-year term (real estate terms); SBA fee waived; first 3 months of payments covered by SBA
notes: Floating/variable interest rate that rose from ~5.5% to ~10.5%. Sellers retained receivables at close. Matt and Dawn did not take salaries for the first ~year. Business acquired September 2021.

Why this business

They wanted an essential, recession-resilient business that couldn't be shut down by COVID or disrupted by Amazon automation. They targeted commercial/industrial trades (not retail consumer) with real estate attached. Metal fabrication/welding appealed to Matt strategically; Dawn's background in blue-collar hospitality industries fueled her passion for trades workers. The original plan was for their son (who had metal-working as a hobby) to become the operator/GM.

What's working

Revenue quadrupled in two years: from ~$900k run rate to $3.8m, with ~$1m EBITDA (~30-35% margins) in year two
Dawn's team-building and operational leadership — she runs the business as CEO day-to-day
Applying the Rew Wild Group growth methodology to build business structure, defined roles, employee one-on-ones, and a business development engine
Matt focuses on sales, estimating, pricing models, and marketing/lead generation rather than doing welding work
Higher-fast-fire-fast hiring model with 90-day trial periods; built a network of proven welders who return for projects
Protecting gross margins from the start — selective on projects, tracking margin per job in QuickBooks; willing to pass on unprofitable work
25-year SBA amortization on the combined business+real estate loan keeps debt service low relative to current revenues
Real estate purchase provided Dawn's desired asset component and is believed to be undervalued relative to what they paid
Culture and structure differentiates them from typical small welding shops — employees understand business profitability and feel part of the team

What's hard

Two original employees turned out not to be strong welders and were replaced within about a year — the 'legacy team' was not the asset they hoped for
Extreme key-employee risk from the start: only two welders, neither owner can weld, and true skilled welders are rare and difficult to hire
Project-based revenue means starting from near zero each year with no guaranteed backlog
Lost some legacy oil-and-gas clients who were uncomfortable with Dawn (a non-welder) leading the business
Mid-year 2022 cash flow crunch: project delays forced near-layoffs; rescued by a large but chaotic project with an Indian firm that stopped paying for six months (~$500k receivable at risk), requiring threatened litigation to collect
Operations manager left with one hour's notice to take a job on a nuclear plant in Texas — no transition or conversation
Variable interest rate rose from ~5.5% to ~10.5%, prompting aggressive loan paydown
Cash flow gap during transition period: sellers keep pre-close receivables while new owner starts payroll from day one; first 90-180 days likely cash-flow negative
Dawn feels imposter syndrome about not being a technical specialist — uncomfortable when clients ask if she welds
2024 started soft due to commercial/industrial construction slowdown; project-based model amplifies revenue volatility

Notable quotes

We could not have started from scratch a welding business and in two years be at 3.8 million. There's just — I don't see a story how we could have done that.

We had half a million dollars in receivables from that one client. It was very stressful — had to threaten litigation and go through all that. But at the end of the day those are the kinds of things that Dawn is very good at. She's not debilitated by it. And so we got paid and that turned out to be — wow, it was actually a good year.

It's not really your intelligence that is going to determine if you're successful as a business — it's your ability to handle the stress. It's that emotional strength to get you through the hard times.

We see people really as revenue generating units. Basically what we say is hey, you guys are the ones that bring in the revenue, we want more of you not less of you. We don't see you just as an expense, we see you as potential revenue.