David Graf·May 25, 2026

The Magic of Low Multiple + Growth | David Graf Interview

David Graf, a former Accenture consultant and Qualtrics software executive based in the Dallas-Fort Worth area, bought Danhard — a 60-year-old light manufacturing company making HVAC systems for specialty vehicles (ambulances, fire trucks, armored cars) — in late 2024 for an effective price of $2.0 million after wholesaling the bundled real estate to a commercial investor in a three-way closing. His central thesis was that growth is systematically underpriced in lower-middle-market deals, and he applied net revenue retention analysis (finding 107% NRR despite no contracts) and identified Danhard's 30% revenue CAGR as a mispriced asset hiding behind a 96-year-old seller's quirky demands (no escrow, no seller note, real estate must be bundled). By solving each piece of hair creatively — representations and warranties insurance for the no-escrow requirement, wholesale real estate for the bundled property, and a detailed NWC audit to contest inflated delivery claims — he landed a ~2.7x EBITDA deal with SBA financing and only ~$60k of his own cash at closing. In 19 months of ownership, adjusted EBITDA has grown 58% to $1.2 million, cash conversion cycle improved from 220 to 150 days, and the company has seen zero regretted employee attrition, with the team operating on EOS and supported by a PEO.

Deal facts

purchase price: $2.0m effective (business only; $5.3m total with real estate, then wholesaled real estate for $3.3m)
multiple: ~2.7x adjusted EBITDA (2.0m / 750k at closing)
sde ebitda: Adjusted EBITDA ~$700k at LOI, ~$750k at closing; grown to $1.2m by month 19
revenue: 7-year target of $15m in sales (2032); current run-rate not explicitly stated
financing structure: SBA loan (majority); ~$60k personal equity injection; local investor placed majority of equity injection in exchange for participating preferred equity plus common equity sweetener (~12% as-converted ownership)
notes: Seller was 96 years old, insisted on no seller note, no escrow, and sale of real estate bundled. David solved no-escrow requirement via representations & warranties insurance. Net working capital peg of $2.0m negotiated; final NWC delivered was $2.1m (mostly inventory). Business founded 1963, on market 1+ year before David's offer. Inventory days outstanding improved from 220 to 150 days post-close.

Why this business

David was drawn to businesses showing strong growth trends, having concluded that growth is underpriced in lower-middle-market deals. Danhard had a 30% revenue CAGR over the prior 19 months (partly from a PE-backed competitor's bankruptcy), 107% net revenue retention, and no customer concentration issues (top customer 12% of revenue, top five under 50%). The low purchase price justified going below his $800k EBITDA buy box, and the hair on the deal — a 96-year-old seller with non-customary demands — was something he could turn into lemonade through creative deal structuring.

What's working

Adjusted EBITDA grew 58% in 19 months of ownership, reaching $1.2m by March of the second year
Zero regretted employee attrition since acquisition; average employee total cash compensation up 15-20%
Strong reoccurring customer base with 107% net revenue retention (no formal contracts)
Cash conversion cycle improved from 220 to 150 days inventory outstanding, releasing tax-free cash from excess inventory
Low purchase multiple (~2.7x EBITDA) keeps debt service manageable and amplifies all other returns
Wholesale real estate strategy (three-way closing) reduced effective business purchase price from $5.3m to $2.0m
Representations & warranties insurance solved seller's no-escrow demand and made offer more attractive
EOS (Entrepreneurial Operating System) implementation embraced by team; runs on 90.io software
PEO (Aspen) providing fractional HR support, payroll, benefits, and compliance
Active advisory investor providing guidance, accountability, and deal sourcing connections

What's hard

Waited too long to replace an underperforming production manager — lesson: act faster on obvious performance issues
Net working capital crisis days before closing when seller claimed $250k extra NWC delivery, requiring rapid coordination with lawyers and bankers; ultimately resolved via 60-day true-up audit that confirmed $110k, not $250k
Business was below his $800k EBITDA buy box, requiring conviction to go off-plan based on deal attractiveness
Seller's non-customary demands (no seller note, no escrow, must buy real estate) required creative solutions
Accounting required a complete overhaul — had to review everything from acquisition through about February of the first year
TAM ceiling risk: niche specialty vehicle HVAC market has a ceiling if the company stays in its primary vehicle types

Notable quotes

I realized pretty quickly that growth is underpriced in search deals. And so I only offered on growthy deals during my search.

The 5x more expensive deal is a much better investment. The cash, the unlevered returns, the levered returns are both superior.

If you buy a cash-flowing asset for a lower price, it is inherently a better return. Like if you just sit back and think about that, it's so obvious. It helps everything else. It helps your debt service ratio. It helps everything.

We have had zero, not almost zero, you know, hypothetically zero, zero regretted employee attrition since I bought the company.