Luis Aguilar·January 16, 2024

14 Months from Searcher to $5.5m EBITDA | Luis Aguilar Interview

Luis Aguilar, a Guatemala-born, Virginia Tech-trained industrial engineer with five years at General Electric and ten years in middle-market private equity operations, left his job to search full-time and within about 14 months built a $5.5m EBITDA commercial laundry/linen rental platform in South Florida. His first deal, a Miami-area linen rental company (Sy's Linen) at $1.5m EBITDA, nearly went to a traditional search-fund structure with friends-and-family investors before he pivoted to Search Investment Group (SIG)/Talis and Stonehenge Capital, a syndicate and impact-fund lender combination that let him retain far more equity and preserved capacity for follow-on acquisitions; the deal almost collapsed when the seller demanded he also buy the real estate, which Aguilar solved by structuring a seller note secured by the property. Three months after closing, the same seller referred him to a second, larger laundry business in Key West ($3m EBITDA), which he closed using a sale-leaseback of the real estate to minimize new equity, growing the combined platform to roughly $5.5m EBITDA. Aguilar's GE operations background proved decisive in diagnosing and fixing neglected, deferred-maintenance equipment (costing about $500k in year one) that a finance-only operator likely could not have handled, while he simultaneously worked to empower employees rather than centralize all troubleshooting in himself. The episode is candid about the psychological toll — 4am starts, constant firefighting, debt-covenant stress, and family sacrifice — even as the deal economics (recurring, contracted revenue commanding rising multiples with scale) worked out far better and faster than a typical search.

Deal facts

multiple: 5x SDE asked by seller on first deal (7.5m on 1.5m SDE, later negotiated down); combined platform later valued at implied ~10x EBITDA range for scale
sde ebitda: Deal 1 (Sy's Linen, Miami): $1.5m EBITDA at acquisition, grown to $2.2m; Deal 2 (Key West commercial laundry): $3m EBITDA at acquisition, grown to $3.3m; combined ~$5.5m EBITDA within ~14 months
financing structure: Deal 1: ~$5.5m SBA debt (with additional mezzanine-like/creative SBA lender debt) plus equity from a family office (Talis) and Stonehenge Capital (a $250m impact debt fund, deal qualified as it was in an Opportunity Zone and Aguilar is a Latino/minority founder); no personal guarantee beyond an asset guarantee; seller carried a $100k seller note on the business (won via a coin flip) and a $3m seller note at 7% interest-only for 5 years on the real estate (purchased separately for $3.8m, negotiated down from $5m ask). Deal 2 (Key West): financed with debt plus a sale-leaseback of the real estate (sold to a third party investor at an implied ~$5m value based on a $350k lease at a 7% cap rate) to minimize equity needed, funded mostly with debt and little additional equity.
notes: Originally pursued a traditional search fund structure with friends/family investors (would have kept only 10-20% equity) before switching to Search Investment Group (SIG/Talis network) to raise capital from a syndicate of ~400 investors, aiming to keep 70-80% equity. Raised $1.8m equity target from small investors in about 4 weeks before ultimately choosing a single large family office (Talis) plus Stonehenge Capital instead, to preserve capacity for follow-on acquisitions. Real estate on deal 1 bought separately in an arm's-length transaction from the operating company money (friends/family, ~$800k).

Why this business

Aguilar built a matrix of five target industries based on criteria from the Harvard search fund book and his private equity experience (recession-resilient, high barriers to entry, industries with tailwinds): pet food manufacturing, outsourced IT/nearshoring, healthcare linen rental, and last-mile 3PL/logistics. He gravitated to commercial linen rental because he'd studied a healthcare linen rental case study during a prior private equity interview and remembered its appeal: ~95% recurring, contracted revenue, an operationally intensive business (matching his operations background), a large and fragmented, recession-resilient market with high barriers to entry. He deliberately was not selective on the specific business ('I want to buy a normal business, an okay business, but I want to be a great operator'), was geographically focused on Florida/Miami for family stability, and was flexible on size (targeted $200k-$2m SDE). He found the first linen rental business on BizBuySell only 20 minutes from his house.

What's working

Highly recurring, contracted revenue (95%+ under contract) gives the business subscription-like economics and supports high acquisition multiples (10-15x at scale vs 2-4x for sub-$1.5m EBITDA plants)
Choosing capital partners (a deep-pocketed family office plus a flexible impact-fund lender) who wanted to back a platform/roll-up strategy rather than many small investors who would need to be repaid before further acquisitions could be financed
Leveraging real estate via sale-leaseback/blanket-sum negotiation to reduce the price of the operating business and fund acquisitions primarily with debt, minimizing new equity needed
Operational background from General Electric (rotating through factories, hands-on with machines, utilities, shop floor) let him personally root-cause and fix plant problems (boilers, compressors, washers) that a finance-background searcher could not have diagnosed
Empowering and training employees to fix machines themselves rather than doing everything himself like the seller had, to avoid being a single point of failure
Sourcing a second, larger acquisition (Key West commercial laundry, $3m EBITDA) via a referral/finder's-fee arrangement with the first seller only 3 months after closing deal one, doubling the platform size
Merging back-office functions (financials, payroll, invoicing) across both plants into one Miami-based team while letting each plant focus on operations
A discipline of learning every job in the business (loading washers, running dryers, doing payroll, driving trucks) in the first three months so he could then delegate rather than remain the bottleneck

What's hard

Underestimated deferred capex/maintenance in the first business, ending up spending roughly $500k in the first year on neglected equipment (irons, air compressor, belts) even after thorough diligence, because the seller had been running the plant to maximize profit and minimize investment ahead of the sale
Running the business was far harder and more time-consuming than diligence suggested; spent the first three months firefighting (flooding, breakdowns, trucks down) inherited from the prior owner's reactive management style
Raising equity from ~400 small investors involved intense rejection (roughly 200 of 400 passed) and slow momentum before a first $100k commitment unlocked further checks
Had to walk away from committed friends-and-family investors (who had already verbally committed capital under a traditional search structure) to instead pursue the SIG/Talis-backed deal with better economics, a difficult conversation and a real 'bird in hand' risk
The seller nearly killed the deal 30 days before signing by reversing course and demanding Aguilar also buy the real estate (worth ~$5m) or he'd sell to a competing buyer instead
Closing day itself nearly fell apart when the lead investor's wire transfer did not arrive by the closing deadline due to a bank delay, forcing an overnight delay
Raised wages 8-10% for hourly workers within the first two to three months, underestimating the second-order effects (increased payroll tax, workers' comp, overtime costs) which pressured margins and could not be fully offset by price increases to customers
Personal toll: waking at 4am, 4:30am-6pm days, described himself as stressed, tired, and scared given the amount of personal debt/covenants and payroll responsibility for around 70-100 employees and 500 customers; sacrificed family time including cutting short a Christmas ski trip to close diligence on the second deal
Has been hesitant to invest in middle management because he wants to protect current margins, recognizing this is limiting further scaling
First-year financial performance dipped below initial underwriting projections (a 'J-curve') despite the business ultimately performing well over the full year

Notable quotes

I knew out of the gate I want to buy a normal business, an okay business, but I want to be a great operator.

To actually make things happen you got to go there, sit with people, train people, talk with people... to buy a company just to buy it, it's hard, but it's the easy part. To grow it and run it and, you know, have all these employees on your shoulders, that's kind of the harder part.

You want to be respected. You don't want to be feared, you don't want to be loved, you want to be respected.

You got to take a dip before you can go up when you're buying these small businesses.