Summary of "Evolving a Legacy Business to $3.2m EBITDA" – Acquiring Minds Podcast
Podcast Information:
- Title: Acquiring Minds
- Host/Author: Will Smith
- Episode: Evolving a Legacy Business to $3.2m EBITDA
- Release Date: June 9, 2025
- YouTube: Acquiring Minds
- Newsletter: acquiringminds.co
Introduction
In this insightful episode of Acquiring Minds, host Will Smith interviews Heather Anderson, an accomplished acquisition entrepreneur who successfully acquired and nearly doubled the EBITDA of a commercial printing business, Direct One, from $1.8 million to $3.2 million within two years. Heather shares her journey, the challenges she faced, and the strategies that led to her remarkable success.
Background of the Guest
Heather Anderson's journey into acquisition entrepreneurship was sparked during her time in the Acquisition Lab with her cohort mate, Evan Stewart, in early 2022. Her background in economics, political campaign management, and MBA studies provided a robust foundation for her venture into buying and scaling a business.
Notable Quote:
"I just start learning as much as I possibly can because it's the biggest decision we're going to make as a company over the next couple of years."
— Heather Anderson [64:28]
Acquisition Process
Heather identified Direct One, a medium-sized commercial print and direct mail services firm based in Winter Park, Orlando, as a promising acquisition target. With a revenue of $34 million and an EBITDA of $1.8 million, she saw potential despite the industry's challenges. She negotiated a purchase price based on a 4x EBITDA multiple, resulting in a $7.2 million acquisition.
Notable Quote:
"This is a classic, let's replace the fax machine."
— Heather Anderson [33:25]
Personal Challenges and Family Impact
The acquisition process had significant personal repercussions. Initially, Heather's commitment to the business strained her marriage as she spent long hours away from her family in Jacksonville. The financial implications were severe, forcing the sale of their home in Jacksonville to pay down the business loan, leading to imposter syndrome and marital tensions.
Notable Quote:
"We burned the boats, but that was the first real, like, oh, wait, this is real."
— Heather Anderson [35:23]
Business Transition and Cultural Shifts
Upon acquiring Direct One, Heather faced the daunting task of transitioning a legacy company with long-tenured employees accustomed to a less structured environment. She emphasized earning the trust of her team by being approachable, investing in company culture, and implementing a clear organizational structure to foster growth and employee satisfaction.
Notable Quote:
"Everyone has to earn the right to be heard."
— Heather Anderson [75:25]
Operational Challenges and Industry Insights
Heather delved into the operational intricacies of the commercial printing and direct mail industry. She highlighted the thin profit margins, significant capital expenditures (CapEx) required for advanced printing technologies, and the complexities of managing postage costs. Heather also discussed the industry's shift from commoditized services to more personalized, value-added offerings.
Notable Quote:
"The margins aren't as thin as they seem. It's between 10 and 15%, a little bit higher."
— Heather Anderson [21:33]
Business Growth and Financial Performance
Despite the initial hurdles, Heather's strategic initiatives led to substantial business growth. By focusing on operational leverage, controlling costs, and embracing technological advancements like variable digital imaging, Direct One's EBITDA surged to approximately $3.2 million. Revenue increased from $15 million to $18.7 million in services, contributing to a total top-line revenue of $42 million.
Notable Quote:
"At the end of last year, we did 18.7 million in services revenue, 42 million total top line revenue. And we're over 3.2 in EBITDA."
— Heather Anderson [77:46]
Future Plans and Vision
Looking ahead, Heather plans to continue acquiring and integrating businesses, leveraging her expertise to create value across different industries. She envisions investing in cutting-edge printing technologies and expanding Direct One's service offerings to embrace integrated marketing strategies, positioning the company as a leader in the evolving direct mail landscape.
Notable Quote:
"I want to do this again and again and again. I don't know if that means another company in this industry. I don't know if that means something adjacent to this industry that can help."
— Heather Anderson [71:23]
Key Takeaways
- Thorough Preparation: Engaging in acquisition-focused education and exercises, such as Porter's Five Forces, can crystallize buyer profiles and investment strategies.
- Personal Resilience: Acquiring a business can strain personal relationships and finances. Commitment and strategic planning are essential to navigate these challenges.
- Cultural Integration: Earning employee trust through clear communication, investment in company culture, and structural organization fosters a positive work environment conducive to growth.
- Operational Efficiency: Understanding industry-specific challenges, such as managing thin margins and high CapEx, is crucial for sustained profitability.
- Strategic Growth: Embracing technological advancements and expanding service offerings can transform a commoditized business into a value-added leader in its industry.
- Visionary Leadership: Continuous acquisition and integration of businesses, coupled with an adaptable vision, drive long-term success.
Final Advice from Heather:
"For any searchers out there that is kind of wobbling thinking. You know, should I do it? Should I not do it? 100% do it. If you feel in your gut that this is what you need to do, do it."
— Heather Anderson [79:56]
Conclusion
Heather Anderson's journey exemplifies the transformative potential of acquisition entrepreneurship. By strategically acquiring Direct One and navigating both personal and operational challenges, she not only doubled the company's EBITDA but also set a foundation for continued growth and innovation. Her story serves as a compelling case study for aspiring entrepreneurs looking to pursue similar paths in business acquisition.
For more insights and detailed discussions, subscribe to the Acquiring Minds newsletter at acquiringminds.co and explore the wealth of resources available to support your acquisition entrepreneurship journey.