Ayo Phillips·January 23, 2025

How to Survive Buying into a Terrible Industry | Ayo Phillips Interview

Ayo Phillips, a Nigerian immigrant who came to the US as a teenager, pursued entrepreneurship through acquisition after reaching the pinnacle of his corporate career and feeling unfulfilled. While at Kellogg business school he discovered search funds and partnered with a single family office to search for a business, eventually closing in July 2017 on a resurfacing and refinishing company serving apartment complexes in Houston, Texas. The deal closed into immediate chaos: Ayo's wife suffered a near-fatal birth complication while the first payroll failed and Hurricane Harvey devastated Houston — all in the first month. Deeper troubles emerged as Ayo discovered the Houston apartment turnover industry was endemic with kickbacks and corruption, was hyper-competitive with very low barriers to entry, and the acquired business had been declining before he bought it. Over 18 months, revenue dropped more than 50% and the company shed staff and spawned 19 former-employee competitors. Ayo rebuilt the business almost from scratch, ultimately pivoting to serve institutional single-family rental (SFR) owners — a newer, less corrupt adjacent market — which produced six-figure monthly revenue from a single client within three months. COVID zeroed that momentum, but Ayo had by then developed the resilience and operational depth to stabilize and eventually sell to a strategic acquirer at a modest but meaningful positive outcome. The episode is as much a philosophical reflection as a business story: Ayo distills his experience into 16 Commandments of acquisition entrepreneurship, emphasizing industry selection as the single most critical decision, the danger of identity fusion with the business, and the importance of emotional management and willingness to pivot.

Deal facts

financing structure: No SBA loan; funded by a single family office investor
notes: Closed July 2017. Business was a resurfacing and refinishing company serving apartment complexes in Houston, TX. Team of roughly 21 at acquisition (technicians, admin, supervisors). Numbers not disclosed. Business was declining at time of acquisition. Exit was to a strategic acquirer within the industry; described as a modest positive outcome given near-failure, not a retirement-level exit.

Why this business

Ayo came from a manufacturing/operations corporate background and wanted to buy something he already knew. He found search funds while at Kellogg business school and was drawn to the model because he could acquire an existing business rather than start from zero. He partnered with a family office that was open to non-traditional industries. He was attracted to resurfacing and refinishing because it aligned with his blue-collar industrial background, and the family office investor gave him the flexibility to pursue deals outside traditional search fund criteria.

What's working

Pivoting to serve single-family rental (SFR) institutional owners for turnover services — a newer, less competitive, more professionalized segment that grew to six figures per month within three months from a single client
Becoming the most tenured employee and doing every job in the business himself, which gave him complete operational knowledge and allowed him to rebuild the team in his own image
Supplementary revenue streams during the turnaround: driveway resurfacing, a roofing line, and converting the company warehouse into a supply store for competitors
Keeping sales generators (technicians) employed during the COVID downturn to be first to serve clients when activity resumed
Strong investor partnership with the family office — weekly communication, on-site visits, and financial support through crises (including the first payroll issue during wife's hospitalization)

What's hard

Bought a declining business in a corrupt, highly competitive 'red ocean' market where maintenance men gatekept apartment complex work orders and expected kickbacks or sexual favors to award business
Low barriers to entry in the resurfacing market meant constant new competitors, including immigrant operators willing to take jobs at unprofitable prices
Bred 19 competitors from within the business — former employees who left and took customers
Hired a GM too early who accelerated turnover and later stole from the company and started a competing business
First payroll crisis occurred while wife was in the ICU after a traumatic birth, with Ayo unable to be on the ground in Houston
Hurricane Harvey hit in the first month of ownership, halting operations for roughly 20 days
Sales declined more than 50% and profit dropped far more than 50% in the first 18 months
Post-pivot growth stalled when new institutional SFR clients became slow or non-payers, straining cash and causing additional personnel losses
Post-COVID, skyrocketing labor and material costs changed the business model toward a construction-like profile that reduced appeal for long-term continuation
Personal toll: 25-pound weight gain, near-dissolution of marriage, severe emotional distress, and identity crisis tied to business performance

Notable quotes

The industry you choose can break you much faster than your skill as a leader will make you. Choose wisely.

A lot of money is made or not made before you step into that CEO seat.

You are not going to dominate an industry — not as a small business. You should not walk in as a rookie CEO with the intention that that's what I'm here to do.

I tell people now that your body might not be at work but your mind will always be on call and you just have to accept that walking into this journey.