Acquiring Minds Podcast Episode Summary

Title: You’ve Been Served: Buying a $1.3m Process-Serving Company
Host: Will Smith
Guest: Raj Khankaria, Owner of Lone Star Attorney Services
Release Date: July 24, 2025
Listen on YouTube: Acquiring Minds YouTube
Sign Up for Summaries: Acquiring Minds

1. Introduction

In this episode of Acquiring Minds, host Will Smith welcomes Raj Khankaria, the newly acquired owner of Lone Star Attorney Services—a $1.3 million process-serving company. The conversation delves into Raj's unconventional journey from being served divorce papers to successfully acquiring and operating a thriving business in the fragmented legal services industry.

2. Raj Khankaria’s Background

[04:24]
Raj Khankaria shares his diverse professional background:

• Military Service: Served as an Army Engineering Officer for five years.
• Education: Earned an MBA in Houston, Texas.
• Corporate Experience: Worked as an investment banker for three years before moving to an LNG (Liquefied Natural Gas) company.
• Transition to Entrepreneurship: After the LNG company was sold, Raj found himself unemployed and navigating a divorce, which led him to explore new career paths.

3. The Pivot to Process Serving

[05:20]
Facing unemployment and personal challenges, Raj decided to become a process server. This decision was sparked by a personal experience where he was served papers, prompting him to inquire about the profession:

• Initial Motivation: Quick income to cover bills during a tumultuous period.
• Starting Point: Became a certified process server, earning over $100 per serve compared to lower-paying gigs like driving for Uber.

Notable Quote:
"I have a keen sense of adventure. It was also something different for me. It was just an easy way to get through that interim period..." — Raj Khankaria [07:00]

4. Building Relationships and Acquiring the Business

[09:55]
While serving papers for Lone Star Attorney Services, Raj developed a close relationship with the company’s owner, Patrick Yoder:

• Collaboration: Assisted Patrick with business development and client acquisition.
• Key Turning Point: Patrick’s plans to merge with another company fell through due to unfavorable tax implications, leading him to seek a new direction.
• Acquisition Offer: Raj offered to purchase Lone Star, presenting a Letter of Intent (LOI) for $1 million, which Patrick accepted despite another competing offer valuing the business at 5x EBITDA with conditions requiring Patrick to stay involved.

Notable Quote:
"See what you think of Raj's journey. He was at a personal low when a door presented itself, an unlikely one, and Raj has been rewarded for his initiative..." — Will Smith [06:00]

5. Structuring the Acquisition Deal

[15:34]
Raj outlines the innovative deal structure that facilitated the acquisition:

• Valuation Basis: Focused on projected EBITDA rather than historical financials, valuing Lone Star at approximately $1.3 million in revenue and $250,000 in EBITDA.
• Seller Financing: Offered Patrick a 4x EBITDA multiple ($1 million) with seller financing covering $600,000 over seven years, including interest-only periods to alleviate immediate financial burdens.
• Rolled Equity: Patrick retained 30% equity, aligning his continued interest in the company’s growth and success.

Notable Quote:
"I believe that legal services and litigation services is going to be the next target for private equity and consolidation..." — Raj Khankaria [17:00]

6. Business Overview: Lone Star Attorney Services

[19:15]
Raj provides an in-depth look at Lone Star Attorney Services:

• Operations: Serves approximately 10,000 papers annually, generating $1.3 million in revenue and $250,000 in EBITDA.
• Team: Employs six individuals across Houston and the Philippines.
• Client Base: Primarily composed of law firms and national process service companies, with a significant portion of jobs in the Houston metro area.
• Technology Integration: Utilizes Serve Manager by InfoTrack for job distribution and tracking, enhancing efficiency and accuracy.

Notable Quote:
"Once a law firm finds a company they like that's easy to work with, they typically stick with that company because it's something they have to have to do." — Raj Khankaria [37:00]

7. Market Insights and Growth Potential

[33:15]
Raj discusses the industry's dynamics and growth opportunities:

• Fragmentation: The legal process serving industry is highly fragmented, dominated by small, mom-and-pop operations with few large players.
• Consolidation Opportunities: Significant potential for mergers and acquisitions, as larger firms look to consolidate smaller ones to increase market share.
• Technology as a Growth Driver: Streamlining operations and integrating advanced technology can offer competitive advantages and drive growth.

Notable Quote:
"It's a Pretty good mix. Divorce papers can get served to anybody... you can kind of tell the direction the economy is going in based on how many debt collection papers are outstanding." — Raj Khankaria [30:06]

8. Ethical Considerations in Process Serving

[31:13]
Addressing ethical questions, Raj emphasizes the essential role process serving plays in the legal system:

• Service of Process as Justice: Ensures individuals are personally notified of legal actions, which is fundamental to due process.
• Avoiding Harassment: Acknowledges the potential for misuse in debt collection but maintains that the service itself is a necessary societal function.

Notable Quote:
"Service of process is actually a service to society because you're telling people in person that this legal action is pending and they need to respond to it." — Raj Khankaria [31:57]

9. Transition and Implementing Changes

[66:35]
Raj shares his experience transitioning into ownership:

• Initial Vision: Aimed to focus on business development and scaling.
• Operational Improvements: Identified inefficiencies and implemented new policies to enhance accountability and streamline workflows.
• Managing Change: Emphasized the importance of introducing changes early (within the first 30-60 days) to leverage employees' openness to transformation.

Notable Quote:
"I'm trading salary for the opportunity to build something of my own, which I am very confident is going to grow." — Raj Khankaria [58:33]

10. Philosophical Insights and Entrepreneurial Mindset

[72:43]
Raj reflects on the serendipitous nature of opportunities:

• Seizing Opportunities: Believes in the mantra "when one door closes, another opens," highlighting the importance of staying curious and proactive even during personal lows.
• X Factor: Stresses that personal enthusiasm and fit with the business are crucial components that go beyond quantifiable metrics.

Notable Quote:
"If I had not interacted positively with that process server, I would not be where I am today. Seek opportunity whenever you can." — Raj Khankaria [72:43]

11. Closing Remarks and Future Outlook

[63:38]
Raj outlines his vision for Lone Star Attorney Services:

• Revenue Goals: Aims to reach a $2 million EBITDA run rate by the end of the year and grow to $5 million with a 30% annual growth rate.
• Expansion Strategy: Plans to pursue both organic growth and acquisitions within the fragmented legal services space.
• Technological Advancements: Continues to leverage AI and other technologies to enhance backend operations without replacing the core service functions.

Notable Quote:
"AI is actually helping our internal processes and not really a threat." — Raj Khankaria [65:17]

Connect with Raj Khankaria

For more insights and information, listeners are encouraged to reach out to Raj via LinkedIn. His professional profile and contact details are available in the episode's show notes.

This episode provides a comprehensive look into the strategic acquisition of Lone Star Attorney Services by Raj Khankaria, highlighting the blend of personal resilience, strategic deal structuring, and industry insights that underpin successful acquisition entrepreneurship.