John Mahoney·January 4, 2024

Moving to a Small Town to Buy an SMB | John Mahony Interview

John Mahoney, a Marine Corps veteran turned Wharton MBA, McKinsey consultant, and certified exit-planning advisor, bought Bailey Heating and Air, a 30-year-old HVAC company in rural Greenville, Tennessee, from founders Robert and Carla Bailey in February 2023 for $1 million (roughly 3x historic SDE, including real estate), financed via SBA 7(a) plus a seller note, with two passive co-investors/mentors serving as his support network. He relocated from Nashville to the small town with zero industry experience, betting on a mission-driven, veteran-inflected leadership style rather than technical expertise, and won the deal over higher-paying institutional bidders because the sellers valued cultural fit and his commitment to live and work there. In his first year he retained the entire team, grew headcount from 9 to 16, digitized the business onto ServiceTitan, and began expanding into electrical (and later plumbing) to smooth out HVAC's seasonal and long-cycle revenue swings. The episode also lays out his longer-term ambition: building 'Change of Command,' a holding company that acquires home-service trades businesses from retiring owners in rural county-seat markets and staffs them with veteran operators. It's a story about slow, deliberate change management, small-town visibility and trust, and using military-derived leadership and camaraderie as a substitute for industry expertise.

Deal facts

purchase price: $1,000,000
multiple: ~3x historic SDE (mid-$300k range) plus real estate; note: 2022 revenue had grown to ~$2.5m
sde ebitda: Historically mid-$300k range for many years; grew in 2021-2022
revenue: ~$2.5m in 2022 (at acquisition); tracking toward ~$3m in first year of ownership
financing structure: SBA 7(a) loan plus a seller note; asset purchase that included the real estate/building; self-funded search with two passive co-investors (Rich Jordan and John Huber) structured as an investor/quick-reaction-force role, not day-to-day operators
notes: Closed February 2023. Deliberately delayed closing past Christmas at the sellers' suggestion to avoid disrupting the team during the holidays. Team retained 100% through transition (grew from 9 to 16 employees within the first year).

Why this business

John Mahoney, a Marine Corps veteran (5 years as an infantry officer) who later got an MBA at Wharton via the GI Bill, worked at McKinsey, helped build a political organization for veteran candidates, and then became a certified exit planning advisor working mostly with Vietnam-era veteran business owners during COVID-era SBA relief work. Those seller conversations planted the idea of becoming a buyer himself rather than just an advisor. He wanted a mission-driven, team-oriented pursuit like the Marine Corps had given him, and was introduced to Robert and Carla Bailey (founders of Bailey Heating and Air in Greenville, Tennessee) through a military-connected referral chain via a broker. He committed to buying wherever the right opportunity was, regardless of location, and moved from Nashville to rural Greenville, Tennessee to run the business full-time as an owner-operator, despite having zero HVAC industry experience.

What's working

Deep trust and 'like family' relationship with sellers Robert and Carla Bailey, who took the business off-market previously because they hadn't found a buyer who reflected their values, and ultimately sold to Mahoney for less than competing PE-style offers because of the cultural fit
100% team retention through the transition, credited to the sellers vouching for him and his own listening-first, slow-change approach
Implemented ServiceTitan software for the first time, moving the business off pen-and-paper record keeping, enabling data-driven decisions
Expanding from HVAC-only into electrical (and eventually plumbing) to diversify against HVAC's seasonal/cyclical revenue and to support recruiting (a popsicle-delivery moment helped recruit two electricians)
Deliberately positions himself as an 'ecosystem builder' and problem-solver rather than trying to become a technical HVAC expert, doing ride-alongs and manual labor to build credibility with the technical team
High visibility/reputation in a small town (Greenville, TN, pop. ~20,000; service area ~80,000) works in his favor once trust is established -- e.g., customers noticing the sign getting fixed and new vehicles
Backed by a support network -- co-investors/mentors Rich Jordan and John Huber (both ETA veterans) whom he calls his 'QRF' (quick reaction force), reducing the isolation often described by searchers
Building 'Change of Command,' a long-term holding company thesis focused on acquiring home-service trades businesses from retiring owners in rural county-seat markets, with veteran operators, and has already added a COO and CFO

What's hard

No industry experience in HVAC, electrical, or plumbing, requiring him to learn on the job (ride-alongs, manual labor) while relying on his team for technical expertise
Business had no formal processes, written SOPs, or regular meeting cadence before the acquisition -- founder ran it as a 'force of nature'; introducing meetings and process had to be phased in slowly to avoid killing early enthusiasm
HVAC industry is highly seasonal/cyclical within a year (dependent on weather) and subject to longer ~15-year replacement cycles; because 2021-2022 pulled forward a lot of system replacements, he anticipates a coming multi-year software patch of weaker HVAC demand nationally
Balancing long-term vision (a multi-decade holding company) against the pressure to show near-term progress, especially compared to traditional fund/search-fund timelines
Managing the intensity of being the new, highly visible owner in a small town where 'everyone is watching,' requiring constant care about appearances and behavior
Deciding how to sequence a long list of 'simple but not easy' operational improvements without overwhelming a team unaccustomed to change

Notable quotes

It's not only the employment of the team but also providing people a great Community to live in.

Only buy a company where you want to live... I had essentially committed to myself that wherever the right professional opportunity, agnostic of location, I was going to pursue.

These two electricians... saw me bring popsicles and that triggered them to say like, all right, we got to go talk to this guy. This is definitely the company we want to join.

I know what it's like to go up into an attic in 100 plus degrees in a August afternoon in Tennessee... I think one, it's great team building with the team where they see me sweating and getting dirty as well, and two, with future owners to partner with there's a lot of credibility there.