Chandler Reed·October 26, 2023

How to Buy a Construction Business | Chandler Reed Interview

Chandler Reed, then 25 and working in multifamily real estate private equity/development in Tampa, bought a struggling commercial lighting retrofit contractor (Onyx Energy, later renamed Get Green NOI) in April 2021 after responding to a stranger's tweet -- Sam Rosati, now his business partner -- looking for an operator. The business had collapsed from $6m revenue in 2017 to about $900k and breakeven after its founder diverted attention to a new venture, leaving one employee; Chandler and his partners negotiated the price down to $625,000, paying 25% down and financing 75% via an unguaranteed seller earn-out (paid off years early). What followed was a wild ride: eight months of solo 80-hour grinding to learn both operations and the multifamily lighting industry, a 2022 boom to $3m revenue riding the post-COVID multifamily buying frenzy, a near-death collapse to just $10,262 in Q1 2023 when rate hikes froze the market and forced Chandler to lay off his entire team, and then an unexpected $800k rebound month in April 2023. Chandler reflects candidly that despite the business's ultimate success, he found project-based construction work -- with its subcontractor headaches, long sales cycles, and revenue lumpiness -- less appealing than recurring-revenue or digital businesses, and says he likely wouldn't buy another one without a clear edge. He's now transitioning Get Green to run mostly on autopilot under his employee Richard while pivoting toward helping Sam Rosati scale an ETA education/bootcamp business.

Deal facts

purchase price: $625,000
sde ebitda: Business was doing ~$0 net income on $900k revenue at acquisition (heavily add-back distorted); at its 2017 peak of $6m revenue it ran about 15% margins
revenue: $900k revenue in the trailing period before acquisition (down from a $6m peak in 2017); $1.1-1.2m annualized in 2021; $3m in 2022; only $10,262 in all of Q1 2023; back up to $1.2m signed contracts by September 2023
financing structure: 25% cash down at closing ($156,250, split among Chandler and partners Sam Rosati and Bert; Chandler personally put in 10% cash plus sweat equity), 75% seller note structured as an earn-out (~$475,000) with no personal guarantee, paid at the greater of $25k/quarter minimum or 33% of quarterly gross profit; paid off in full about two and a half years ahead of schedule with a final $104k payment
notes: Seller was asking $1,000,000; negotiated down to $625,000 after being told buyer was considered 'buyer of last resort' since strategics had passed. Business (Onyx Energy, a commercial lighting retrofit contractor for multifamily apartments, founded 2014) had collapsed from $6m revenue in 2017 to $900k/near-zero profit because the seller diverted attention and staff to a new, faster-growing multifamily smart-home venture. Business was renamed to 'Get Green NOI' per a contractual obligation to change the name by October 2021. No in-house labor -- business subcontracts all installation labor, keeping it asset-light with lower margins in exchange for a lean team.

Why this business

Chandler saw a tweet from Sam Rosati (a stranger at the time, now his business partner) looking for an operator based in Tampa to run a multifamily-focused commercial lighting business; the opportunity required someone who knew the multifamily industry, could move to/already lived in Tampa, and had 'more hustle than capital.' Chandler had worked in multifamily private equity/asset management and for a commercial real estate developer, so he knew the industry jargon and had a rolodex of contacts, which made him comfortable taking on a business he initially knew nothing about (light bulbs, installation, subcontracting). He was 25, had no mortgage or major assets, and viewed the opportunity as a low-downside 'MBA-equivalent' learning experience with a call option on the upside, deciding worst case he could 'eat ramen and couch' at friends' places if it failed.

What's working

Attractive deal terms: 25% down / 75% seller-financed earn-out with no personal guarantee and a low absolute purchase price ($625k) for a business that wasn't SBA-financeable
Existing client relationships and repeat/reoccurring (not recurring) project flow from large multifamily owners/property managers who have many communities needing retrofits
Asset-light subcontractor model keeps overhead low and allows working nationwide on many projects at once
Retaining and incentivizing the sole existing employee (Richard) with a stay bonus and a new performance-based bonus tied to company success, letting him run fulfillment/project management
Opportunistically adding a new EV-charging-station service line when a client asked, which had 'more legs' than other planned green-retrofit expansion
Documenting processes (Loom videos, SOPs) to delegate to hires (a Philippines-based virtual assistant, then a project engineer, then a project manager) and pull Chandler out of day-to-day tasks
Business rebounded sharply in April 2023 (an $800k contract-signing month) after nearly going under in Q1 2023, driven by clients redeploying previously frozen capital budgets

What's hard

Extremely volatile, project-based/construction revenue tied to multifamily transaction and capital-expenditure cycles -- went from $3m revenue in 2022 to just $10,262 in all of Q1 2023 when the Fed's rate hikes froze multifamily transactions and capex spending
Had to lay off nearly the entire team (a VA and three in-office hires) in March 2023 to survive, only for a huge rebound one month later
Steepest learning curve was managing people -- had never hired or managed anyone before, initially pushed his own ideas without properly listening to Richard's experience-based pushback, and had to learn to 'check his ego at the door'
First eight months of ownership were an all-consuming grind (5-6 hours of sleep, doing every function himself: CEO, CFO, HR, invoicing, project management), causing him to withdraw from his social life and friendships
Construction-specific headaches: subcontractors damaging client property (e.g., a cherry picker cracking a client's sidewalk) while Chandler still bore ultimate responsibility ('our throat that is choked'), long 3-9 month sales cycles, clients paying by check, dealing with 'dinosaur' clients
In hindsight, Chandler says project-based construction businesses are less appealing than recurring-revenue/digital businesses and he would not buy another one unless he had a specific edge
Growth ambitions to become a one-stop 'green retrofitting' shop (water efficiency, EV charging, solar) mostly stalled -- only the EV line gained real traction; the broader vision was shelved during the downturn

Notable quotes

You never want to buy a job.

You can't model people in Excel.

I thought I was you know the greatest operator out there, lo and behold a lot of that had to do with the market not just my hard work and dedication into the business and strategy if you will.

Unless you have some sort of edge... there's a lot easier ways to make money than project-based construction businesses. However, like I said, if you're the right girl or guy for the job and you find an opportunity like I found, go ahead and get into it.