Dustin Carreon·July 22, 2024

The Scrappy Path of a One Man Holdco | Dustin Carreon Interview

Dustin Carreon is a self-made, first-generation entrepreneur from South Los Angeles who — without a college degree and after a stint in juvenile detention as a teen — built Freelance Electronics, a small electronic components distributor, starting in the early 1990s. Using that business as a cash-generating base and drawing on a Warren Buffett-influenced capital allocation philosophy, he began acquiring small industrial businesses in 2017, eventually assembling COI Holdings: a portfolio of five companies projected to exceed $20m in combined revenue in 2024, of which he owns 100% equity. His four acquisitions include BNB Socket Products (nuts and bolts for aerospace and prosthetics, ~$525k, 2017), Quest Fastener and Industrial Supply in Seattle (~$1m revenue, cash purchase, 2020), Sierra Pacific Supply (aerospace fastener distributor in California, ~$1.1m purchase at COVID trough, now doing $12-13m revenue — his biggest win), and Gates Washer (a Chicago manufacturer of washers, ~$6-7m revenue). Dustin's model centers on buying businesses with durable, specification-driven moats in industrial distribution and manufacturing, operating them with maximum autonomy under a holdco-level team of long-tenured staff, and reinvesting all cash flows to compound acquisitions rather than seeking outside capital or a defined exit. His hardest lesson came at BNB Socket Products, where a toxic two-person team and his own over-ambition nearly derailed the business before he recalibrated to an investor rather than operator mindset; the episode convinced him that understanding why a business makes money — before trying to change it — is the most important first step.

Deal facts

purchase price: ~$525k (BNB Socket Products, 2017); ~$1.1m (Sierra Pacific Supply, including inventory and receivables, 2021); Quest Fastener paid cash, amount not specified; Gates Washer amount not specified
sde ebitda: BNB: not profitable at acquisition; Sierra Pacific: operating margins ~15-20% on $4-5m revenue at time of purchase
revenue: Portfolio aggregate ~$20m revenue in 2024; Sierra Pacific ~$12-13m (2024), was $4-5m at acquisition; Gates Washer ~$6-7m; Quest Fastener ~$1m+; BNB Socket Products $700-800k at acquisition
financing structure: BNB Socket Products: structured escrow (~$100-150k) tied to key employee retention, seller financing elements; Sierra Pacific Supply: SBA 7(a) loan, ~$150k (~15%) down payment; Quest Fastener: paid cash; no external fund or LP capital used
notes: Portfolio of 5 businesses under COI Holdings. First acquisition 2017. Dustin is 100% equity owner. BNB purchase price ~$475k business + ~$40-50k inventory = ~$525k total. Sierra Pacific included purchase of receivables and inventory. Gates Washer is a manufacturer in Chicago. One small bolt-on acquired just before recording. Target debt-to-equity ratio: under 50-60%.

Why this business

Dustin grew up around his father's scrap metal business and developed an intuition for buying undervalued assets and generating cash flow. After reading 'Buying a Business for Idiots' in Hawaii, he saw that buying whole businesses was a natural extension of what he had been doing for years — allocating capital, buying inventory deals, and calculating future cash flows. He focused on nuts, bolts, fasteners, and industrial distribution because he understood the moat created by aerospace/defense specification requirements, recognized the similarity to how he valued inventory lots at Freelance Electronics, and wanted businesses with predictable long-term economics that would not require constant reinvention.

What's working

Sierra Pacific Supply tripled in revenue from ~$4-5m to ~$12-13m within ~3 years of acquisition, largely due to post-COVID aerospace recovery — the company's best single investment
Acquiring businesses with aerospace and defense specification moats (parts 'specked in' to customer products), creating sticky, hard-to-replace supplier relationships
Building a holdco-level team (CFO and support staff, largely drawn from long-tenured Freelance Electronics employees) that provides shared services and financial oversight across all operating companies
Cross-training mandate: every employee trains the person below them to do their job, reducing key-person risk and creating an internal bench for new acquisitions
Investing in manufacturing consultants and Six Sigma practices at Gates Washer to formalize processes and enable cross-training
Buying businesses with low capital intensity and owner-operators willing to sell at reasonable prices, often during downturns (Sierra Pacific acquired at COVID trough in Aerospace)
Maintaining low debt (targeting under 50-60% debt-to-equity) and reinvesting cash flows into compounding acquisitions rather than paying out distributions
Patience in sourcing: willing to wait years between acquisitions rather than force deals; found several businesses on Bizbuysell and similar public marketplaces
Owning real estate at two of the operating locations, providing financial flexibility

What's hard

BNB Socket Products (first acquisition) had a toxic, mistrustful culture; two key employees resisted new ownership and one became controlling and difficult to manage
Accidentally breached NDA-like confidentiality during diligence at BNB by asking a vendor contact about the target — the word spread to employees and nearly killed the deal
Came in too aggressively at BNB trying to hire salespeople and scale quickly, which failed; had to step back and understand what the business truly was before making changes
Many acquired companies have no written processes, no succession plans, and employees who have 20-30 years of knowledge entirely in their heads — transferring that knowledge is a persistent challenge
Several long-tenured employees approaching retirement across the portfolio in the next 3-4 years, creating knowledge-transfer risk
Model of semi-autonomous opcos with holdco shared services creates gaps if any individual business were to be sold — it is genuinely a buy-and-hold structure, not optimized for exit
Balancing micromanager tendencies with the need to delegate and trust people across multiple businesses
Operating companies in multiple states (California, Seattle, Chicago) adds complexity; weather and geographic volatility planning now required

Notable quotes

My job is to allocate capital. I am to put money to work in the best places. Now there's a lot of other things that come under that — leader, visionary, try to empower people, recruiting, all that other stuff — but my main job is to do that.

I am grateful that this acquisition has been my hardest acquisition. I'm glad that it wasn't easy because I learned so much from it.

The trunk of the tree is the holding company, and the branches are the individual companies in itself, and those branches are getting nutrients which is cash flow. And as long as those nutrients are coming through, the tree is going to continue to grow and get taller and taller.

There's no such thing as a business that really runs itself. The goal is to reframe it: let me find the business that requires the least amount of oversight, the least amount of fixing. What is the business that, with the right process and the right people, if I visit it once a year, nothing would really change except for the fact that it has more money than it did today?