Acquiring Minds Podcast — Episode Summary

Podcast: Acquiring Minds
Host: Will Smith
Episode: "Life is Just Brighter" in a $1.2m Distribution Business
Date: April 6, 2026
Guest: Joseph Cruz, Owner of A and A Equipment & Supply

Episode Overview

This episode tells the story of Joseph Cruz’s journey from a career in finance to acquiring and operating A and A Equipment & Supply, a niche distribution and repair business serving the water and sewer infrastructure industry in Chicago. Joseph shares how his immigrant upbringing shaped his work ethic, how a chance encounter at a laundromat sparked his interest in small business ownership, and details the acquisition process, deal structuring, transition, operational challenges, and early successes—including a dramatic moment when the key GM quit just before closing.

Key Discussion Points & Insights

1. Joseph’s Background and Entrepreneurial Spark

• Immigrant Influence:
  • Joseph’s upbringing by Filipino immigrant parents in Chicago profoundly influenced his risk tolerance and drive.
  • “They were the real ones that took the big risk … way bigger of a risk than what I’m doing right now.” — Joseph Cruz (08:42)
• Early Experiences:
  • Worked odd jobs from a young age; multiple school startups, both of which failed, offering valuable lessons in resilience.
• Finance Career:
  • Started in small investment banking, then spent eight years at Fifth Third Bank in Chicago, covering industrials and actively advising on debt/capital structures for companies in infrastructure-related fields.
  • “All of it was surrounding debt advisory … and that’s where I really start to like what I’m doing today, which is infrastructure.” — Joseph Cruz (12:35)

2. Discovering ETA and the Search Process

• Starting Point:
  • The spark came from a neighborhood laundromat, not social media or school influences.
  • “I was so pumped about just the possibility of owning this laundromat. Even though it was just such a dump … it gave me so much energy. After that, I was hooked.” — Joseph Cruz (23:38)
• Learning Phase:
  • Read E Myth, Traction, Buy Then Build; joined Cody Sanchez’s ETA community for resources but found his finance background gave him an edge in diligence.
  • Gained valuable diligence lessons when a prior laundromat owner revealed hidden business issues (27:24).
• Industry Targeting:
  • Sought businesses with enduring demand and defensive characteristics.
  • Chose water/sewer infrastructure distribution because of projected multi-decade investment in Chicago ("400,000 lead lines … 50 years of work" —15:20).

3. The Acquisition: Finding and Structuring the Deal

• Finding the Business:
  • Discovered A and A Equipment & Supply on BizBuySell.
  • Business Profile:
    • Focus: Construction supply/repair, niche in sewer and water infrastructure.
    • Longevity: Operating since 1982.
    • Location: Centrally located near O’Hare, key for customers.
    • Revenue (at acquisition): $1.2M, 15% EBITDA margin, 6 employees.
  • “When I saw that most of their revenue came from sewer and water, I was immediately attracted … once I saw that I was like, there’s something here.” — Joseph Cruz (36:19)
• Deal Structure:
  • Price: $536k (about 2.2x SDE, intentionally conservative).
  • Financing: $75k equity, $55k seller note, $550k SBA loan (with working capital, fees bringing total closer to mid/high $600k).
  • Notable Terms:
    • Earn-out via side letter: $50k tied to revenue targets, added after the GM quit pre-close (66:03).
    • $25k Holdback: To cover unforeseen claims; cash simply left in the business. Useful later for vehicle repair issues (71:33).
  • Stock Purchase: Chosen over asset purchase to maintain key government vendor contracts
  • Transition Planning: Orchestrated bonus timing from previous employer (54:06–56:48).

4. Transition and First-Year Operations

• GM Quits Pre-Close:
  • Expected to rely on the GM post-close, but his departure forced Joseph to rapidly learn all aspects of the business.
  • “It was a blessing in disguise … it forced me to figure everything out … forced me to create resources, systems, writing things down.” — Joseph Cruz (83:37, 84:34)
• Onboarding and Documentation:
  • Discovered critical operational details lived only in owner/GM’s heads, not on paper. Immediate focus on documenting vendors, systems, logins; moved operations onto SharePoint for team use.
• Lifestyle & Compensation Shift:
  • Walked away from mid-six-figure total comp in finance (“mid-six figures, call it $400,000 a year”) for a $60–$75k owner salary, emphasizing long-term vision, autonomy, and honoring family sacrifices (56:01–59:35).
  • Saw positive lifestyle changes: “even though I’m making less … my control on all my costs and budgeting is way better than what I had when I was in finance.” — Joseph Cruz (58:48)
• Managing Seasonality:
  • “If you’re going to buy a construction business that’s seasonal, don’t buy it in December like I did.” — Joseph Cruz (43:07)
  • Added services (equipment repair, targeting winterization in off-season) to smooth revenue.

5. Early Wins: Growth and a Small Add-On

• Acquired a Mechanic “Add-On”:
  • Brought on an independent mechanic whose lease was ending. Major driver for boosting high-margin service revenue (73:59).
  • “Service was up 200% just from bringing that guy on.” — Joseph Cruz (75:58)
  • Cross-sell synergies between repair services and core distribution.

6. Lessons Learned & Leadership Insights

• Working Capital Realities:
  • “Projecting when I’m going to receive cash from customers is impossible … really getting a grasp on your weekly cash flow is important.” — Joseph Cruz (92:19)
  • Importance of vendor relationships: Being a “slow-payer” cost the business a key distributorship before he arrived; Joseph prioritized restoring reputation and improving payment practices (94:06).
• People & Culture:
  • “The owner sets the emotional temperature.” — Joseph Cruz (97:40)
  • Listened to employees, implemented daily briefings, and built SOPs for accountability and autonomy (100:38).
• Onboarding & Team Development:
  • “The real unlock wasn’t finding the perfect people. It was setting expectations, creating repeatable onboarding, giving autonomy while building checks, letting leaders emerge.” — Joseph Cruz (100:37)
  • Molded roles to employee strengths (103:27).
• Personal Growth:
  • “One of my whys was to become an expert … now, I know way more about sewer and water than both [the previous owners].” — Joseph Cruz (86:09; 88:47)
  • Found fulfillment in leadership, solving team conflicts, and fostering a collaborative, open culture (“discussions like this may make me want to do good work for you.” —104:57)

7. The State of the Business & Looking Forward

• 2025 Results:
  • $1.5M revenue (up from $1.2M at purchase).
  • Major growth from high-margin service side; additional revenue opportunity in materials and equipment.
• 2026+ Targets:
  • Aiming for $2M in 2026; eyes set on $5M by 2030, through a combination of organic growth and additional small acquisitions (107:44–108:48).
• Day to Day:
  • Currently working in the business 30–40% time—out of choice and to continue deep learning (109:21).
  • Advocates that new owners should fully “work in the business” at first in order to learn and gain employee trust (111:04).

Notable Quotes & Moments (with Timestamps)

• “They were the real ones that took the big risk … way bigger of a risk than what I’m doing right now.” — Joseph Cruz on his parents’ immigration (08:42)
• “I was so pumped about just the possibility of owning this laundromat. Even though it was just such a dump … it gave me so much energy. After that, I was hooked.” — Joseph Cruz (23:38)
• “You can learn all you want about the industry from the outside, but until you’re in the seat, you don’t know anything.” — Joseph Cruz (31:16)
• “It forced me to figure everything out. And I knew if the GM was still there … I could have easily seen it being easy from my perspective … but to create little changes in the business, I think it would have been a lot more difficult.” — Joseph Cruz on GM quitting (83:37)
• “All of my [work in finance] was advisory. There was no skin in the game. But the whole ETA journey is completely different. It is—the complete polar opposite.” — Joseph Cruz (32:15)
• “Even though I’m making less … my control on all my costs and budgeting is way better than what I had when I was in finance.” — Joseph Cruz (58:48)
• “People feed off the owner’s energy—if you’re down, the team will be too.” — Joseph Cruz (97:40)
• “The real unlock wasn’t finding the perfect people. It was setting expectations, creating onboarding, giving autonomy, letting leaders emerge.” — Joseph Cruz (100:37)
• “Everyone needs to work in their business, 100%, until they’re comfortable talking to customers and selling whatever they do.” — Joseph Cruz (111:04)
• “Discussions like this may make me want to do good work for you.” — Employee to Joseph Cruz, after resolving a conflict (104:57)
• "Now, I think this year is going to be a pretty, pretty good year." — Joseph Cruz, looking ahead (107:44)

Timestamps for Pivotal Segments

• 06:34 – Joseph’s upbringing and work ethic
• 12:35 – Corporate finance experience, developing industry focus
• 15:20 – Infrastructure tailwinds, Chicago market rationale
• 23:38 – Laundromat encounter, initial spark for entrepreneurship
• 27:24 – Learning from diligence: laundromat owner story
• 36:19 – Discovery and overview of A and A Equipment & Supply
• 49:40 – Deal structure, DSCR rationale, and cash holdback/earnout mechanics
• 66:03 – GM quits pre-close; deal restructured
• 73:59 – Add-on small acquisition of a mechanic shop
• 83:37 – “Blessing in disguise” of losing GM
• 92:19 – Working capital, cash flow lessons
• 97:40 – Leadership: owner’s emotional temperature sets the tone
• 100:37 – People/culture: no “perfect” people, importance of onboarding and fit
• 104:57 – Resolving team conflict; proud leadership moment
• 107:44 – Where the business is today; roadmap for the future
• 111:04 – On the value of working in the business vs. on the business

Conclusion

This episode is a rich case study in self-funded search, highlighting the practical realities, emotional journey, and operational challenges of buying and running a small business. Joseph’s reflections offer tactical advice for deal structuring, transition management, and the vital importance of leadership, cultural stewardship, and adaptability. For anyone considering ETA, this story is both sobering and deeply encouraging—a testament that “life is just brighter” on the other side of the leap.

Further resources:

• Joseph’s LinkedIn and published LinkedIn articles (linked in show notes)
• A and A Equipment’s website: aa.equipment

For full podcast and webinar resources visit: acquiringminds.co