Acquiring Minds: Buying a Remote, 20-Year-Old Business with $900k of SDE
Episode Release Date: May 1, 2025
Introduction
In this insightful episode of Acquiring Minds, hosted by Will Smith, listeners delve into the fascinating journey of Dan Angel, an entrepreneur who successfully acquired a 20-year-old corporate travel management business, Lodging Source, generating $900,000 in Seller's Discretionary Earnings (SDE) on a $3 million top-line revenue. This episode uniquely features perspectives from both Dan, the buyer, and Jamie Moylan, the Vice President of Lodging Source, offering a comprehensive view of the acquisition process from both sides.
Dan Angel's Path to Acquisition
Dan Angel begins by sharing his unconventional path to entrepreneurship. Originally from South Africa, Dan moved to the United States as a child and built a career in finance, working at Bear Stearns during the tumultuous period leading up to its collapse in 2008. Despite his initial aspiration to join a hedge fund, his career aspirations shifted over six years of introspection and experience in the hedge fund industry, where he realized a desire to create tangible value by leading and growing a business.
Notable Quote:
Dan Angel [07:56]: "I think when I saw everything collapse when I was at Bear Stearns, I just realized those funds are probably the smartest out there."
Dan's revelation came from feeling unfulfilled in the hedge fund role, where his focus was primarily on investing rather than creating and managing value within a company. This introspection, coupled with personal experiences such as the loss of a friend, propelled him to pursue entrepreneurship through acquisition.
Choosing the Self-Funded Search Model
Dan discusses his decision to pursue a self-funded search model over the traditional search fund approach. Initially unaware of the self-funded option, attending the Southeast ETA conference and Sam Rosati's Pursuit Bootcamp provided the necessary support and network to embark on his search without external investors.
Notable Quote:
Dan Angel [13:35]: "For me, the self-funded model at this point in my life made a ton of sense."
This model allowed Dan greater autonomy and avoided the complexities of raising funds, aligning with his personal and financial situation. The cohort from the bootcamp proved instrumental, with several peers also successfully acquiring businesses.
Acquisition of Lodging Source
Dan recounts the acquisition of Lodging Source, highlighting its robust business model centered on extended state travel for B2B clients such as construction companies and restaurant chains. The company’s unique value proposition lies in providing comprehensive travel management services at no cost to clients, compensated through hotel commissions.
Business Model Insights:
- No Direct Cost to Clients: Lodging Source charges clients nothing directly, earning revenue from hotel commissions.
- Specialization in Extended Stay: Focuses on long-term stays for project-based travel, ensuring consistent demand.
- Strong Client Base: Includes reputable chains and construction firms, ensuring stable revenue streams.
Financial Highlights:
- SDE: $900,000
- Purchase Multiple: Just over 4x SDE
- Gross Bookings: Approximately $30 million annually
- Net Revenue: Around $3 million with 30-40% margins
Notable Quote:
Dan Angel [34:13]: "One of the nice things that we do is our customers are paying the exact price that we get the hotel for. So pure transparency there."
Despite initial concerns about working capital and remote operations, Dan successfully navigated the complexities through thorough due diligence and leveraging existing relationships within the industry.
Transition and Integration: Jamie Moylan's Perspective
A pivotal aspect of the episode is Jamie Moylan’s firsthand account of the acquisition. As the long-tenured VP at Lodging Source, Jamie provides a critical perspective on how the transition affected the team and the company's culture.
Initial Reactions: Jamie describes the acquisition news as disorienting and overwhelming, given her deep-rooted relationship with the previous owner and her integral role in daily operations.
Notable Quote:
Jamie Moylan [86:19]: "It was a very chaotic few days for me, but that was kind of my first experience with what was going on."
Building Trust and Culture: Despite initial overwhelm, Jamie highlights the importance of trust-building between her and Dan. The shift from a familiar leadership to a new CEO required careful navigation to maintain the established company culture.
Notable Quote:
Jamie Moylan [94:17]: "Dan did a lot of things well. But one thing that I appreciated up front was he put a lot of trust in me right out of the gate."
Managing Change: Both Dan and Jamie acknowledge the challenges of integrating new leadership while preserving the company’s culture. They emphasize gradual, thoughtful changes over aggressive overhauls to ensure stability and sustained growth.
Notable Quote:
Jamie Moylan [107:57]: "I think just going slow and showing that you care and you understand... keeping the pace manageable is the best you can do."
Growth and Future Outlook
Since the acquisition, Lodging Source has seen significant growth and strategic enhancements. The team expanded from 15 to 23 employees, including international hires in the Philippines, enhancing operational efficiency and support. Investments in technology, such as the relaunch of their internal database system, have positioned the company for continued growth.
Key Developments:
- Team Expansion: Increased from 15 to 23 employees, including remote staff.
- Technological Upgrades: Implemented Lodging Wizard 2.0 to streamline operations.
- Revenue Growth: Achieved high single-digit growth last year, targeting 40% growth this year.
Strategic Insights: Dan emphasizes sustainable growth, balancing expansion with operational stability and team well-being, while Jamie underscores the importance of maintaining a strong, collaborative culture.
Lessons Learned and Advice for Aspiring Buyers
The episode concludes with valuable takeaways for entrepreneurs considering business acquisitions:
- Thorough Due Diligence: Understand not just the financials but the underlying culture and operational nuances.
- Build Trust with Key Employees: Ensuring buy-in from pivotal team members like Jamie is crucial for seamless transitions.
- Balanced Growth Strategies: Prioritize sustainable growth over rapid expansion to maintain operational integrity.
- Adaptability in Leadership: Be prepared to adjust leadership styles to align with existing company cultures, especially in remote settings.
Notable Quote:
Dan Angel [74:01]: "Growth isn't free. Chances are, this seller was running the business not necessarily bare bones, but was running it at a pretty high margin level."
Conclusion
Dan Angel’s acquisition of Lodging Source serves as a compelling case study in acquisition entrepreneurship, illustrating the complexities of purchasing a remote, established business and successfully integrating new leadership while preserving core company values. Jamie Moylan’s insights offer an invaluable perspective on the employee experience during such transitions, highlighting the importance of communication, trust, and cultural preservation.
For aspiring acquisition entrepreneurs, this episode underscores the importance of strategic planning, relationship-building, and adaptive leadership in navigating the intricate landscape of business acquisitions.
Key Resources:
- Lodging Source Website: lodging-source.com
- Dan Angel's LinkedIn: LinkedIn Profile (Placeholder for actual link)
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This summary captures the essence of the episode, providing a detailed overview of Dan Angel’s acquisition journey, the business model of Lodging Source, the transition experience from Jamie Moylan’s perspective, and actionable insights for aspiring business buyers.