Steve Reis and Danny Fields·March 11, 2024

Unlocking Growth in a Business, Average Age 55 | Steve Reis and Danny Fields Interview

Steve Reis and Danny Fields, both former Army officers who met at Rice's MBA program, ran a traditional search fund starting in 2017 and in 2019 acquired Holland Supply, a Midwest distributor of natural gas measurement and pressure-regulation equipment to utilities, with just nine employees and an average employee age of 55. Despite thin-looking distribution economics on paper, Holland generated over $1 million in revenue per employee and 20%+ margins (versus a typical 5-10% for distributors) because its sales team acted as technical consultants helping utility engineers spec complex, configurable products, backed by deep inventory and technicians that let them ship 70% of orders within three days. The seller had found them by cold-emailing Danny's dormant SearchFunder.com profile specifically because of their oil-and-gas industry backgrounds, which later proved critical to convincing skeptical investors that a 'natural gas' business wasn't cyclical or volatile. The first 18-24 months were consumed by change management - installing modern systems, replacing a DOS-based setup, and managing near-total turnover as the aging original team retired (one key employee died in his sleep) - which delayed organic growth. To secure supply and defend Holland's product lines during COVID-driven manufacturing shortages, they later built a parallel manufacturing company (Utility Solutions Group) by acquiring product-line assets from a manufacturing partner, growing that side from zero to roughly 60 employees and creating a vertically integrated but operationally separate distribution-plus-manufacturing platform in the natural gas utility space.

Deal facts

revenue: low eight figures (roughly $10m) at acquisition in 2019; grown ~50% at Holland since
financing structure: Traditional search fund (raised search capital from investors, retained a board and cap table with outside equity investors)
notes: Financial criteria used in search: margins 15-20%+ (typical distributor margins are 5-10%, Holland's were north of 20%). Business had 9 employees (including the two founders) and did over $1m revenue per employee at acquisition. Founded in 1968 by Earl Wenz (a Navy Frogman/WWII veteran); run by his son Craig from the 1980s until the 2019 sale. Subsequent manufacturing arm (Utility Solutions Group, started 2021) was built via two separate asset acquisitions (product lines only, no going-concern, no employees) from a manufacturing partner - the first a couple of product lines a few years ago, the second seven more product lines acquired in October 2023, requiring hiring ~40 new employees and a move to a new 14,000 sq ft facility in Columbus, Ohio.

Why this business

Steve and Danny met in Rice University's MBA program, both wanted an entrepreneurial path but weren't sure what, and Steve discovered the search fund concept through a Harvard classmate. They chose a traditional (investor-backed) search over self-funded because they both needed salary and health insurance (Danny had a newborn) rather than a nest egg to live on. They spent roughly two years searching, tried spam email outreach, then pivoted to deep proprietary research (trade shows, personalized letters) - but ultimately found Holland Supply through a boutique investment bank that discovered Danny's dormant SearchFunder.com profile and targeted them specifically because of their oil & gas industry backgrounds, which matched what the retiring seller (Craig) was looking for: young operators who understood the technical, utility-adjacent industry and wouldn't relocate or absorb the business into a larger corporation.

What's working

Holland is a distributor of natural gas measurement and pressure-regulation equipment to gas utilities, with a highly technical, consultative sales process (engineers need help specifying complex, configurable products) that differentiates it from typical 'box in box out' distributors and supports margins of 20%+ versus the industry's typical 5-10%
Deep in-house technical expertise and a well-stocked, correctly-configured inventory let Holland ship 70% of orders within three days versus a roughly 6-month average lead time if utilities ordered directly from manufacturers - a major competitive differentiator
Revenue is tied mostly to replacement/maintenance of a massive, decades-old installed base of gas infrastructure (roughly 70 million U.S. residences use natural gas, with an estimated 3% annual depreciation/replacement rate), giving the business a reliability and quality-of-revenue profile that behaves like recurring revenue even though it isn't subscription-based
Their own oil & gas industry backgrounds (Danny at GE Oil & Gas, Steve at Intermech in mechanical services) gave them credibility with the seller and let them accurately vet and explain the business's value drivers to skeptical investors/bankers, who initially recoiled at 'natural gas' due to assumed cyclicality/volatility
Vertically integrating by acquiring manufacturing product lines (asset purchases from a manufacturing partner struggling with COVID-era labor constraints) let them shorten lead times (one line went from ~70 weeks to ~20 weeks) and secure supply that Holland depended on, while intentionally keeping the manufacturing entity (Utility Solutions Group) separate from the distribution business

What's hard

The average employee age was 55 at acquisition (with Steve and Danny, 33 and 36, the two youngest); within about two years they experienced almost 100% turnover of the original team, including the most valuable employee passing away in his sleep, forcing an accelerated and emotionally difficult effort to transfer decades of tribal technical knowledge to new hires
They deliberately delayed pursuing growth for the first ~1-2 years to stabilize operations, retain technical competency, and manage change (installing an ERP to replace a DOS-based system, formalizing tribal knowledge), which they now view as the thing they'd have done differently if the business had already been growing at acquisition
The initial 'spam' email outreach approach to sourcing (1-2 hundred generic emails/week to purchased contact lists) produced almost zero value/quality leads despite months of effort, before they shifted to deep proprietary research and personalized outreach
The manufacturing acquisitions were driven partly by necessity/survival, not just opportunity - their key manufacturing partner couldn't keep up with product demand during COVID labor shortages, threatening to make product lines unmarketable or lead the partner to divest them to a competitor who might cut off Holland's supply
Running two full companies (distribution and manufacturing) simultaneously has been extremely labor-intensive and stressful, an 'emotional roller coaster,' with real personal costs (missed birthdays, family events) and the pressure of being the ones whose capital and reputation is on the line as owners rather than employees

Notable quotes

There is no Silver Bullet there is no one place that you should be spending your time in fact you should be spending your time in every possible nook and cranny whether it's a trade show or a personalized Written Letter or a Spam message you should be doing everything

I think we both agree at this point the total spam reach approach directly to business owners was like 0% value I think that's the one thing I would completely axe if I did it again

We were looking for margins north of 20% ... typical from what we learned is 5 to 10% for a traditional box in box out distributor

It's a day in and day out grind every day feels like a grind ... you're going to miss birthdays you're going to miss family events you're going to miss weddings reunions ... that risk is yours and yours alone and just know what you're getting into