Greg Bruns·October 10, 2024

Margins in Mulch: Buying a $1m Erosion Control Business | Greg Bruns Interview

Greg Bruns, a former commercial banker from Houston, TX, bought Allied Hydromulch TX LLC — a 34-year-old hydromulching and erosion control business — for $925,000 in May 2024, putting down just $60k of his own capital via an SBA loan with a $225k seller note. The business does about $1.15m in revenue with ~35% SDE margins (roughly $350k SDE), primarily serving construction GCs, industrial sites, and DOT projects by hydroseeding and wildflower planting for regulatory-required erosion control. Greg was attracted to the exceptional margins, regulatory tailwinds from EPA erosion requirements, and the fact that the prior owners had run it as a lifestyle business, leaving clear upside. The transition has been bumpy: a brutal July 2024 (Hurricane Beryl plus heavy rains halted operations), persistent cash flow pressure as a subcontractor on Net 30-60 terms, an asset sale that reset vendor credit lines and cost a near-$500k contract, and the challenge of earning credibility in the rough-and-tumble construction industry as a white-collar outsider. Greg's key risks are labor availability, weather dependency, and customer concentration around prior-owner relationships — but he remains bullish on the Houston market and is planning equipment investment, headcount growth, and potentially a roll-up of local competitors.

Deal facts

purchase price: $925,000
sde ebitda: SDE ~$350,000 (broker claimed $400k)
revenue: $1.15m (2023)
financing structure: SBA loan (~$740k financed total) + $225k seller note (8%, 8-year amortization, 2-year full standby) + $100k permanent working capital + $60k equity injection from buyer
notes: Asset sale. Lender: First Internet Bank (Sam Cralis). Buyer equity injection: $60k (approx 6% down). Seller note on full standby for 2 years so SBA could count it as equity. Closed May 2024, LOI December 2023.

Why this business

Greg was drawn primarily by the exceptional margins — roughly 35% net and ~90% gross profit margins — in what he saw as a niche but regulation-tailwind business. He liked that it was not tied to a retail location, had recurring demand driven by construction and EPA erosion-control requirements, and had been run as a lifestyle business by the retiring owners, leaving substantial room to grow. He also had a personal affinity for green spaces and horticulture since childhood.

What's working

Exceptional gross profit margins (~90%) and net margins (~35% SDE on revenue), driven by low material costs and limited competition
Strong regulatory tailwinds: erosion control is now required by building codes and EPA on most large construction and DOT projects, making demand non-discretionary
Hydromulching is typically the final step before a GC gets project sign-off, giving the business pricing leverage and urgency with customers
Long-tenured key employee (Ry, 33 years with the company) providing operational continuity
Seller (John) stayed on for a negotiated 9-month transition period and expressed willingness to continue beyond that, protecting customer relationships
Houston market: high-growth, pro-business, construction activity not slowing, providing a strong demand base
Strong May-June revenue out of the gate (~$200k in June alone)

What's hard

Extreme weather dependency: Hurricane Beryl and subsequent heavy rains effectively shut down July operations, compressing cash flow severely
Cash flow management as a subcontractor on Net 30-60 day terms — constantly carrying large accounts receivable while still needing to make payroll, SBA payments, and vendor payments
Asset sale created friction: vendor credit terms reset from 60-90 days to 30 days, insurance had to be fully re-underwritten at higher premiums, bank lines of credit unavailable as a new entity
A near-$500k contract that was in negotiation at closing was lost because the engineering firm would not transfer the contract to the new LLC entity
Labor challenges: finding legal workers willing to do physically demanding outdoor work who will stay through weather-related gaps in income
Customer relationships were deeply personal to the prior owner (John); Greg is an outsider to the construction industry culture and lacks immediate credibility with longtime customers
Equipment issues discovered just before closing required negotiation with seller over repair responsibility
The business has been sub-$1m revenue for 34 years — scaling has proven difficult historically and Greg is still learning why
Greg is paying himself minimally (~$10k total in first 2.5 months) and must carefully manage personal finances through the transition

Notable quotes

I saw that the previous owners had really just run it as a lifestyle business for them, you know they were in their early 70s, they paid for their Astro season tickets and they had a paid off house and their kids were grown — I said you know what, this is a lifestyle business for them and I said I saw so much meat on the bone.

The gross profit margins are phenomenal in this — I mean you're talking 90% gross profit margins maybe higher. Really. So cheap material and not a lot of competitors for whatever reason.

Accounts receivable is out the window when I don't have cash in the bank. Now they all end up paying and then it builds back up but then it's just going to shrink back down. The old adage is you talk to a lot of subcontractors and on Tuesday they got 100 grand in the bank and by Friday they're broke again.

Make sure you 100% want to do an asset sale before you actually do that. Just know that you are in the eyes of banks, in the eyes of vendors, you are a brand new company — you are not the same company. Doesn't matter if you have a DBA, doesn't matter if it's the same employees, you're a new company.