Acquiring Minds – Episode Summary

Episode Title: 40% Growth in Year 1 of a Paving Business
Date: March 23, 2026
Podcast & Host: Acquiring Minds, hosted by Will Smith
Guest: Eric Donahue, owner of Peninsula Paving, retired Navy SEAL (SEAL Team 6)

Overview

In this episode, Will Smith interviews Eric Donahue, a retired Navy SEAL who transitioned into entrepreneurship by acquiring Peninsula Paving, a 25-year-old paving business in Hampton Roads, Virginia. In just his first year, Eric grew the business from $4.1M to nearly $6M in revenue—a striking 40% increase. He shares tactical insights on deal sourcing, financing (including a conventional loan instead of SBA debt), operational improvements, culture change, and the unique management perspective he brought from his military background.

Key Discussion Points & Insights

Eric's Background & Path to Entrepreneurship

• Military Experiences and Skill Transfer (05:10–09:57)

  • SEAL Team 6 taught Eric the value of "doing simple things at a really high level."
  • The transition to civilian life was daunting due to losing a high-functioning, mission-focused environment.
  • "The more I looked into it, the more I saw... direct correlation to the reason why these elite special operations groups are really successful. It really comes down to doing simple things at a really high level." – Eric Donahue (09:13)

• Discovery of ETA (Entrepreneurship Through Acquisition) (07:36–09:11)

  • Eric learned that buying a business could shortcut the years of struggle in building something from scratch.
  • Experience 'dabbling' with a tree services business helped him value acquiring an established business over starting new.

Sourcing and Acquiring the Business

• Deal Sourcing via Networking (15:08–19:00)

  • Old-fashioned, network-based search: “...I did it all old-school... I was familiar with BizBuySell...The best advice I got... you're going to have coffee, have breakfast, and whoever they tell you they want you to meet, you're going to go meet with them...” – Eric (15:11)
  • Military background opened doors: all owners he approached were receptive, often out of recognition for his service.

• Business Profile and Negotiation (20:40–27:02)

  • Peninsula Paving: 4.1M average revenue, 16 FTEs, ~17.5% margin, $500K EBITDA.
  • No active broker at time of approach; previously failed sales process due to poor broker valuation.
  • “I definitely wanted the seller to have buy-in... If I'm gonna pay someone interest, I'd rather pay you than pay the bank.” – Eric (27:41)
  • Deal Structure: ~33% seller note, conventional bank loan—not SBA.

• Financing – Conventional Loan over SBA (33:10–38:21)

  • Leveraged Town Bank—the same bank Peninsula Paving already used.
  • Advantages: Better rates & fees vs. SBA, but still included a 7-year amortization and a personal guarantee.
  • “If you end up getting serious in serious talks with a company... see if the bank that they currently bank with is interested, because it's a great way to get to the finish line.” – Eric (35:03)
  • “The only real... question mark is: is this guy the right one to step in there and run it?” – Eric (36:43)

Transition and Growth Initiatives

• Immediate Focus Post-Acquisition (39:41–44:51)

  • Treated first 4.5 months as an intensive learning 'deployment,' with Eric working both in the field and office to fully understand operations.
  • Built credibility with the crew by working alongside them.
  • “...I just wanted to learn what was going on out there so I could speak about it intelligently to our clients and also so I could understand, you know, where we could add efficiency.” – Eric (43:13)

• Year 1 Revenue Growth: Factors & Tactics (45:44–59:16)

  • Market Shift — A major competitor was acquired and exited the market, opening up substantial additional work. (46:21)
    • “One of our biggest competitors was bought... and basically decided, hey, we're not going to compete on any of these projects anymore... so we ended up getting a fair amount of that work.”
  • Subcontracting — Instead of referring, subbed out complementary services (sealcoating, line stripping, concrete) for markup, especially for 'restricted' (e.g., military base) jobs with higher margins.
  • Splitting Crews — Identified and promoted internal leaders; ran two simultaneous teams, increasing hours and job throughput.
  • Digitization & Process Improvements
    • Introduced tablets in the field for real-time updated job info, reducing inefficiency stemming from outdated paperwork.
    • "Something as simple as getting tablets, where as we update stuff in our system, they see it in the field, made a big difference." – Eric (54:32)
    • Instituted clear division of roles with foremen, superintendents, and invested in whiteboards for job planning and visibility.

• Capacity & Capital Investment (59:16–64:50)

  • Near current operational capacity—future growth requires two fully-staffed paving crews, more equipment, and especially more skilled people.
  • Phased capex: incremental investment in equipment, used backups during peak growth, plan for backup/prime rotation.

Culture and Personnel

• Culture Change & Personnel Turnover (65:40–74:22)
  • Transparent, accountable, 'tighter ship' culture—inevitably lost some legacy staff during transition, but those who stayed “performed at a higher level.”
  • Key office staff member (Dave) was crucial to a smooth transition.
  • “I said, ‘Hey guys, for the first six months, I’m not making any changes.’ ...as we became a little bit more efficient...the guys that didn’t like that...found their way out on their own.” – Eric (67:21)
  • Biggest challenge: recruiting/retaining skilled crew members.
  • Promoted from within; referrals are now common.

Cash Flow, Compensation, and Lifestyle

• Owner Compensation & Lifestyle (82:22–85:09)

  • Eric pays himself $75K/year but also receives $80K in military retirement; spouse works in real estate.
  • “I really don’t need to take much from the business...it opens up all that money to do something else with, whether it’s make an improvement, hire another employee, whatever. It just gives me more flexibility.” – Eric (83:27)
  • Reinvests profits into growth and capital improvements. Market salary for his role estimated at ~$200K all-in.

• Stress Perspective (85:09–86:21)

  • Eric’s military background provides perspective; “It’s not like, you know, if we make a bad decision, someone’s going to get killed... we're going to win a lot more than we lose.”

Licensing & Regulatory Tips

• Licensing Hurdle (76:05–80:21)
  • Needed a Class A contractor’s license (specifically 'heavy highway') in Virginia.
  • Successfully leveraged military demolition experience to meet prerequisites and get approval to sit the licensing exam.

Industry Thoughts & Final Advice

• Paving is fundamentally recurring: asphalt always needs maintenance, and commercial clients plan out months in advance.
• Two business models: asphalt plant owners (high barrier, large jobs) and FOB (like Eric)—lighter capex, but still equipment-intensive.
• Year-round paving in warm climates seen as ideal; northern operations face seasonal layoffs.
• Highly recommends ETA for other retiring military veterans: “The skills just translate really well... leadership, identifying inefficiencies, implementing processes.”
  • “I recommend it highly to the guys I used to work with... a great transition to your... second career.” – Eric (91:13)

Notable Quotes & Memorable Moments

• “It really comes down to doing simple things at a really high level... in blue collar, if you do basic things at a high level, you're going to put yourself at... the top of the industry.” (09:13)
• Asked why more businesses don’t do the basics better: “They're the owner of the company, but they're also out there on the job site every day... they're also the one doing the scheduling, the phone calls...” (10:57)
• On networking as a searcher: “... I was like batting a thousand. I never had anyone say, no, I can’t do it. I’m busy. Most of the time people would take me out and want to pick up... the check at breakfast.” (18:02)
• On subbing out referenced work: “In the past, they... didn't want to provide the management. ...for us, if we were going to sub out something complimentary... we were really looking for the ones where we could make a significant markup.” (48:13)
• “If you end up getting serious... with a company you want to buy, see if the bank that they currently bank with is interested, because it's a great way to get to the finish line [with a conventional loan].” (35:03)
• On paving as a business: “I love it. The fact that asphalt is a product that degrades over time... it's the most widely recycled product in the world...” (86:55)

Timestamps for Important Segments

• Eric's Military Background & Transition — 05:10–09:57
• Discovery of ETA & Value of Acquiring vs. Starting Up — 09:11–13:59
• Networking and Sourcing the Deal — 15:08–19:00
• Deal Structure, Valuation, and Negotiation — 20:40–27:02
• Conventional Bank Loan in Place of SBA — 33:10–38:21
• Post-Acquisition Transition and Learning Period — 39:41–44:51
• Detailed Growth Levers (competitor exit, subcontracting, digital ops, splitting crews) — 45:44–59:16
• Capacity, Capex, and Crew Management — 59:16–64:50
• People, Turnover, and Culture Change — 65:40–74:22
• Owner Compensation & Re-investment — 82:22–85:09
• Licensing Hurdles & VA Regulatory Tips — 76:05–80:21
• Perspectives on Stress, Industry Fit, and Veteran Transition Advice — 85:09–91:55

Takeaways for Aspiring Acquisition Entrepreneurs

• Network Locally. Don’t underestimate the power of in-person introductions and local credibility—especially for veterans.
• Understand the Industry. Many construction businesses (especially in warm climates) have recurring revenue, operational complexity, and capex requirements but also significant growth levers.
• Local Banking Relationships Matter. Consider the business’s existing bank; relationships and existing accounts can enable non-SBA financing.
• Growth: Both Luck and Skill. Be ready to capitalize on market changes, but also drive revenue by managing subs, digitizing ops, and maximizing your team.
• Culture Shift Requires Backbone. Not all legacy employees will make it, but stronger culture leads to better performance and attracts referrals.
• Veterans Are Well-Equipped. Leadership, process discipline, and a clear perspective on stress/urgency are huge assets in small business ownership.
• Licensing Is Nontrivial. Plan for regulatory hurdles early in your diligence process.
• Reinvest for Growth. Modest personal compensation enables aggressive reinvestment and long-term value creation.

Contact / Links:

• Peninsula Paving: PenPave.com
• Eric Donahue on LinkedIn
• Acquiring Minds: acquiringminds.co
• YouTube channel: @AcquiringMinds

This summary captures the content, tone, and key lessons of the conversation to be actionable and valuable for aspiring acquisition entrepreneurs!