Brian Lee Shields·December 11, 2023

How to Buy a Property Management Business | Brian Lee Shields Interview

Brian Lee Shields, a former Lehman Brothers/Welsh Carson private equity professional turned startup operator (including a stint doing buy-and-build acquisitions at venture-backed Mind Property Management), bought a small San Francisco property management company called Hill & Co in December 2019 for about $600k against a thin $170k SDE, funded through equity, seller notes and bridge debt. He and a partner modernized the undermanaged, paper-based business -- introducing basic project-tracking tools, outsourcing roles internationally, and fixing a negative-50 NPS -- then made a second, debt-financed acquisition (Pacific Union, ~$1.2m) to add density in the same market before selling the combined company about two and a half years after the first deal in a competitive process between two strategic acquirers. The episode's second half pivots to Shields' severe burnout during the post-sale integration period in 2022, driven by accumulated operating stress compounded by his father's death, a difficult pregnancy, and a move, which produced stroke-level blood pressure and memory/performance breakdowns and led him to take a full year-long sabatical. The story is as much a cautionary account of founder burnout in ETA as it is a tactical playbook for buying and improving a property management business.

Deal facts

purchase price: $600k (first acquisition, Hill & Co); $1.2m (second acquisition, Pacific Union); ~$1.8m total invested across both
sde ebitda: SDE $170k at time of first acquisition (Hill & Co)
revenue: ~$3m revenue for Hill & Co at acquisition; second acquisition added roughly another 40% of revenue on top
financing structure: First deal: self-funded/partnership equity plus seller notes and bridge financing. Second deal (Pacific Union): financed almost exclusively through debt after refinancing the whole capital structure with a bank loan, replacing the bridge debt and seller note with a five-year term note (first year interest-only).
notes: Sold the combined business for what Shields describes as a 'pretty hefty premium' after an unsolicited bidding process between two strategic acquirers; declined to disclose the exact exit number on this episode. Business was acquired December 2019, sold roughly two and a half years later.

Why this business

Shields came from investment banking (Lehman Brothers) and private equity (Welsh Carson), then operational roles at venture-backed startups including Mind Property Management, a tech-enabled property management roll-up. After walking away from a dental lab acquisition over key-employee/culture risk, he pivoted back to property management because it was the industry where he had the deepest network, hiring ability, and pricing/diligence confidence -- he wanted the deal with 'the highest likelihood and levers to success,' which meant leaning on direct industry experience rather than starting in an unfamiliar vertical.

What's working

Recurring, low-churn B2B revenue and a highly fragmented market with visible roll-up/density economics (buying nearby books of business to increase local density and manager capacity utilization)
Bringing basic technology and transparency (starting with a shared Google Sheet, then graduating to Asana visible to clients) into a business that was still running on paper files and on-site servers, which directly fixed the negative-50 NPS score inherited at acquisition and took it to roughly zero within about six months
Outsourcing and geographically distributing roles (accounting, dispatch/phone answering via a Philippines-based assistant, staff in Florida, West Virginia, Texas, San Diego, Argentina) to cut cost basis and improve response times in an expensive, litigious state like California
A strong, complementary partnership (Brian on people/culture, his partner on finance/strategy and prior operating experience) and a low-basis acquisition that let them refinance into all-debt financing for the second, adjacent-market deal
A second acquisition (Pacific Union) that added density, cut duplicate overhead (closed their office, one software system), and created referral flow from a larger brokerage

What's hard

Property management is 20-40% more operationally difficult than a typical small business, per Shields, because of constant moving pieces, no certification requirements for staff, and being the stress bottleneck between tenants/HOA members and property owners who want opposite things
The deal was bought thin (SDE of only $170k against a $600k purchase price with two partners), requiring quick operational wins just to make the economics work
Rolling out new systems and accountability (a 'takeoffs need to equal landings' completion-rate standard) caused real turnover among staff unused to being measured, requiring careful, patient change management rather than his previous more confrontational management style
Severe personal burnout starting in early 2022 during integration with the acquiring strategic: memory lapses, missed calls with his own business partner, stomach problems, stress-driven hypertension (160/100, 'stroke level'), compounded by his father's death from a stroke, a difficult second pregnancy, and a cross-country move -- ultimately requiring him to step back from the new company and take a full year-long sabatical to recover
He explicitly connects the burnout to years of never 'opening the release valve' -- compartmentalizing stress from payroll pressure, client blowups, and staff turnover rather than processing it, even while building an employee-appreciation culture for his own team that he didn't extend to himself

Notable quotes

I just didn't know how ebitda happened right... how the ibida actually happens how you organize people in ways and processes and systems to deliver the eida it takes a different skill set than the Excel macros require

property management is another 20 to 40% more operationally difficult

we took over and we had a negative 50 NPS so very bad the industry average is seven so we had our work cut out for us

my blood pressure was like 160 over 100 or something it was like super high right and that's like stroke level and I was sitting there thinking to myself like holding back tears worrying that I was going to like I've killed myself