Greg Geronemus·November 17, 2025

Buy Well, Exit Better: A $67m Win in 4 Years | Greg Geronemus Interview

Greg Geronemus and his business school partner David Rosner conducted a traditional search fund out of HBS (class of 2012), geographically constrained to the tri-state area due to their partners' careers. They sourced Smart Tours — a group tour operator founded in 1996, based in Midtown Manhattan — via a networking chain that started at a BDO happy hour. The business had ~$30m revenue and ~$5m EBITDA run by just seven people including the founder, who was ready to retire. They acquired it in 2013 for ~$29m (~5x EBITDA) with ~50% seller financing at 4% interest and $5m SBIC debt, putting in $10m of equity — a capital structure that enabled rapid deleveraging and strong equity returns even with flat revenue. Their primary value creation thesis was de-risking the extreme founder key-person dependency and professionalizing operations, while digital marketing proved a bust and direct mail unexpectedly became the top-line growth lever along with a new B2B-to-C distribution channel through universities, churches, and retirement communities. After four years, they exited in 2017 for $67.5m (9x EBITDA) to Summit Park PE, netting ~$62.5m to investors plus ~$4m in prior distributions — one of the standout outcomes in traditional search. The episode is notable for its detailed discussion of negotiation strategy (letting the seller go first), capital structure mechanics, and the unexpected failure of conventional growth levers in favor of old-school direct mail.

Deal facts

purchase price: $29m
multiple: ~5x EBITDA (entry); 9x EBITDA (exit)
sde ebitda: EBITDA ~$5m at acquisition; ~$7.5m at exit
revenue: ~$30m at acquisition; ~$50m at exit
financing structure: ~50% seller note (at ~4% interest) + $5m SBIC debt (senior to seller note) + $10m equity from search investors
notes: Sold for $67.5m (9x EBITDA) to Summit Park PE firm. ~$4m in distributions paid during hold. Net proceeds to investor group ~$62.5m. Delevered from $19.5m to ~$4m debt during 4-year hold. Business subsequently shut down after COVID-era chapter 11 restructuring by acquirer.

Why this business

Smart Tours was not on their radar as an industry — Greg and David were industry agnostic and geographically focused on the tri-state area. They were introduced to it through a serendipitous networking chain (BDO event -> Capital One banker -> accountant for the seller). What got them excited was: large, fragmented, growing industry; exceptional cash flow characteristics (collect money upfront, pay out later = negative working capital); high EBITDA margins with a lean team; and a history of PE firms paying healthy multiples for tour operators, suggesting a strong exit opportunity if they could professionalize and de-risk the business.

What's working

Exceptional cash flow profile: negative working capital (customers pay ~1 year in advance), no capex, allowing rapid debt paydown of ~$5m/year
Buying well at ~5x EBITDA with a 50% seller note at 4% interest, creating strong equity returns even with flat revenue
De-risking the seller's extreme key-person dependency by adding staff and infrastructure, transforming the business from 7 to 20+ employees
Direct mail as the breakout growth lever — recommended by a retired industry expert — accelerated top-line after digital marketing underperformed
Building a B2B-to-C sales channel (universities, religious organizations, retirement communities, companies) on top of the existing direct-to-consumer product, expanding distribution without changing the underlying product
Sticky, recurring customer base: high repeat rates and strong word-of-mouth referrals from travelers who have a great experience
Destination diversification (South Africa was only ~20% of revenue) cushioned impact of localized crises like Ebola scare
Ran a competitive banker-led exit process (Fitus Partners) generating 78 NDAs, 37 IOIs, 12 management meetings, and multiple firm LOIs, ultimately selling to Summit Park at 9x EBITDA

What's hard

Both founders were finance guys with no operating experience; year one was a steep learning curve figuring out how to run a business
Digital marketing (paid search, paid social) was a significant failure — the demographic was older, the product was high-ticket and high-trust, and gross margins were not sufficient to support the required customer acquisition costs
Persistent macro disruptions drained leadership energy: Russia-Ukraine conflict (2014), Ebola scare affecting South Africa travel, Zika, terrorism in Europe, Egypt unrest — while these didn't devastate the financials, they stifled growth and were exhausting to manage
Key-person risk was extreme at acquisition — seller had hands in everything with a team of only seven — and they had to carefully rebuild infrastructure without going deep into a J-curve
They created their own key-person risk as co-CEOs post-acquisition, which was a concern for buyers at exit
Inherent cyclicality of travel businesses means holding through a downcycle can extend hold period and add stress; awareness of this contributed to their decision to sell when on a strong upswing
The PE buyer that acquired Smart Tours could not survive COVID — revenue went to zero, the business went through chapter 11 in 2021, and ultimately shut down in early 2025

Notable quotes

There's no way I would have ever put out the idea of a 50% or 60% seller note. I would have been too concerned about offending the seller because that's, you know, grossly off-market. And so, you know, I would have done myself a significant disservice if I had gone first.

We weren't willing to jeopardize the, you know, just how darn profitable the business was. We weren't willing to risk the great things that we had because we knew that even if we didn't grow that much, we would be in a really good position.

If you take a $10 million equity check and you pay down $45 or $5 million of debt per year, you're generating a 40 to 50% return on equity every single year, even in a scenario where the business is flat, even in a scenario with no multiple expansion.

You can create a lot of value on the way in with how you buy the business, what you pay for it, how you structure it. You can play it safe and still generate an excellent return. You don't need to bet the farm to generate an outsized return in this part of the market.