Nick Haschka, Dillan Ferguson·July 15, 2024

Building a $10m EBITDA Leader in a Fragmented Space | Nick and Dillan Interview

Nick Haschka (serial acquirer, former management consultant and plantscaping company owner) and Dillan Ferguson (ex-ExxonMobil mechanical engineer and operations executive) are building a regional generator dealer and service roll-up in California under the brand On Point Generators. Their investment thesis centers on deteriorating U.S. grid reliability — especially in California — driving step-change demand for residential and commercial backup power, while the industry remains highly fragmented with owner-operated mom-and-pop shops incapable of scaling. They raised ~$6.5m in preferred equity (waterfall structure, no SBA debt) to fund multiple all-equity acquisitions, closing first on Conte's Generator in Monterey (asset purchase, ~$3m revenue, mid-six-figure SDE) and then, just before recording, Power Gen in Tracy, CA (stock purchase, ~doubles headcount). Conte's transition was rocky: severe seller dependency, an asset purchase requiring full back-office rebuild, and a major atmospheric river storm hitting just three weeks in — driving call volume from 15 to 300/day with only three technicians. Despite this, they scaled headcount from 6 to 13+ employees and revenue to a $5m+ run rate within five months. Nick builds a custom App Sheet/Google Cloud SQL platform in-house; Dillan manages operations; the five-year model targets ~$50-60m revenue and $10m EBITDA — the threshold they believe will attract institutional buyers.

Deal facts

sde ebitda: SDE advertised mid six digits (slightly above $500k, less than $1m)
revenue: ~$3m at acquisition; run-rating ~$5m+ five months post-close
financing structure: All-equity from a $6.5m preferred equity raise (total cap $7m); small seller note; no SBA debt
notes: Platform raise of ~$6.5m preferred equity intended to fund two full acquisitions. First acquisition: Conte's Generator, Monterey CA, asset purchase. Second acquisition (Power Gen, Tracy CA) closed just before recording; stock purchase; doubles headcount to ~25+. Five-year model targets ~$50-60m revenue at ~18% EBITDA margin (~$10m EBITDA).

Why this business

Nick's thesis was a bet against incumbent utility companies' ability to solve fundamental issues in electric infrastructure — climate change, end-of-life grid assets, electrification, migration patterns — manifesting as eight straight years of worsening grid reliability, particularly acute in California. The thesis: rising demand for backup power meets a fragmented, aging base of small mom-and-pop generator companies that could never recruit, systematize, or scale. The opportunity was to build a fundamentally more scalable, higher-performing platform by rolling up incumbents and modernizing them.

What's working

Demand tailwind: California grid reliability issues and atmospheric river weather events drove a surge in inbound leads; the business 'always wanted to be bigger' and was constrained only by the prior owner's personal preferences, not market demand
Rapid headcount and capacity scaling: grew from 6 to 13-14 employees at Conte's within five months, including dedicated install and service teams, a GM, first salesperson, and offshore support
Revenue growth: from ~$3m at acquisition to run-rating ~$5m+ five months in, tracking toward $7m for the year
Custom low-code software (App Sheet on Google Cloud SQL) built internally to manage service, install, and customer data — enabling fast iteration and a scalable data architecture tailored to the business
Complementary partnership: Nick handles capital, software, and strategy; Dillan runs day-to-day operations — each focused on their strengths
Preferred equity structure avoids SBA seasoning constraints, allowing fast sequential acquisitions; second deal (Power Gen) closed within months of first
Stock purchase on second acquisition avoided the heavy transition tax of asset purchase — all contracts, vendor accounts, and systems carried over automatically

What's hard

Severe seller dependency at Conte's: prior owner Frank wore essentially every hat — primary electrician, primary technician, sales, and management — and handed over the keys on day one with minimal transition
Asset purchase complexity: accounting, payroll, insurance, vendor credit agreements all had to be rebuilt from scratch simultaneously, creating bottleneck after bottleneck in the first weeks
Atmospheric River storm hit just three to four weeks into ownership — call volume went from ~10-15/day to ~200-300/day while the business had only three technicians and nearly no back-office systems in place
Hiring specialized generator technicians is difficult: the role requires either a great electrician with mechanical aptitude or a skilled mechanic who can learn electrical diagnostics — a rare combination
SBA debt unavailable for rapid sequential acquisitions due to seasoning requirements and J-curve earnings depression, requiring the preferred equity raise structure instead
Nick's personal sacrifice — significantly less sleep and more time away from family over the prior nine months

Notable quotes

We are the backup systems for data centers for hospitals for surgery centers — if the light ain't green at the surgery center there's no surgeries today, which means no revenue. We got to get our busts over there and make it happen.

This business always wanted to be bigger and it was always just held back by the seller for his own personal reasons. He liked getting out there and he liked doing the work himself. He limited the business to a size that he was comfortable with.

No problem we've faced is existential. There's not personal BK on the line, losing your house, losing your in-laws' house. It feels a lot more rational and it's allowed us to focus on doing the things we know to be the right things for the business for the long term even amid some near-term pain.

Finding a partner is difficult but I think buying a business by yourself is even more difficult than that. My skill set is in operations and coming into this as a partner with Nick and being able just to focus on the operations and not have to worry about all the things that Nick does — I think it's allowed us to grow a lot quicker than most people would.