Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Episode #216: How One Operator Is Making Big Waves in Business Acquisitions
Release Date: June 27, 2025
Hosts: John Wilson and Jack Carr

Introduction

In Episode #216 of the Owned and Operated podcast, hosts John Wilson and Jack Carr delve into the dynamic world of business acquisitions within the home service industry. This episode features Chris Barr, a proactive operator who is making significant strides in acquiring businesses. The discussion centers around Chris's recent acquisition attempts, the strategies he employs, and the lessons learned from both successful and unsuccessful endeavors.

Recap of Chris Barr’s Journey

[00:00 - 03:19]

Jack introduces Chris Barr, highlighting his ongoing quest to acquire businesses, specifically in the plumbing, electrical, and HVAC sectors. Chris shares his excitement about recent developments and the traction his efforts have gained. The hosts emphasize the importance of understanding the nuances of business acquisitions and the impact of personal relationships on deal-making.

Notable Quote:

• Chris Barr [00:30]: "Such a dynamic couple of weeks. But I mean all good things. Yeah, love to see the traction."

Initial Acquisition Attempt: The Pool Company Deal

[04:58 - 15:31]

Chris recounts his first acquisition attempt with a pool company, codenamed "Scrooge McDuck" for NDA purposes. The discussion highlights the challenges of skipping the Letter of Intent (LOI) phase and moving directly to an Asset Purchase Agreement (APA). This approach, although bold, led to complications when another buyer seemingly outmaneuvered Chris, raising concerns about broker practices.

Notable Quotes:

• Chris Barr [05:41]: "We've gone through a transaction before and we know what that flow looks like."
• Jack Carr [14:09]: "Somebody else came and stole it out from under you in the interim."

Lessons Learned from the Pool Company Deal

[15:31 - 19:49]

The hosts dissect the failed pool company deal, focusing on the decision to bypass the LOI phase. Jack emphasizes the traditional acquisition process, outlining steps from initial contact to due diligence and finally, the APA. The conversation reveals the risks associated with skipping critical phases, such as reduced leverage during negotiations and increased financial exposure.

Notable Quote:

• Jack Carr [07:35]: "After you finish that, you go into the APA, like, 'Hey, I'm ready to buy.'"

Successful Acquisition: The Pressure Washing Business

[19:49 - 38:24]

Shifting gears, Chris shares his successful acquisition of a pressure washing business. He describes the meticulous sourcing process, including hiring freelance contractors to identify potential targets. The deal was expedited thanks to a strong relationship with the listing broker and the pre-assembled team that facilitated swift due diligence and legal processes.

Key Points:

• Sourcing the Deal: Chris leveraged Upwork to find suitable businesses, leading to a prompt discovery of a pressure washing company listed for sale.
• Due Diligence: Engaged a top-tier accounting firm to conduct a thorough quality of earnings (QOE) analysis, ensuring transparency and accuracy in financials.
• Financials and Purchase Price: The business, with a four-year average revenue of approximately $1.7 million, was listed at $1.5 million—a figure at the higher end of Chris's range. Creative structuring, including an earnout, was employed to mitigate risks.

Notable Quotes:

• Chris Barr [21:11]: "Their revenue over like a four-year average is like right around like 1.7 million."
• Jack Carr [22:43]: "You have somebody already to go to for some easy due diligence, you have somebody already to go to for some legal work."

Creative Deal Structuring: Earnouts and Seller Financing

[38:24 - 45:25]

The conversation delves into the innovative deal structure Chris employed for the pressure washing business. Instead of a straightforward purchase, Chris introduced an earnout component and seller financing to balance risk and reward. This approach ensures that the seller remains invested in the business's success while providing Chris with financial protection.

Earnout Structure:

• Initial Payment: $900,000 at closing.
• Earnout: $300,000 over three years, contingent on the business meeting specific financial targets.
• Seller Financing Note: 25% of the purchase price is handled via a seller-financed note, providing the seller with ongoing income and incentivizing performance.

Notable Quotes:

• Chris Barr [26:22]: "We're doing 900k at close and the rest in an earnout."
• Jack Carr [27:03]: "An earnout structure is usually a private equity firm comes in, buys a company, wants to keep the owner on..."

Risk Mitigation Strategies in Acquisitions

[23:43 - 33:36]

A significant portion of the discussion focuses on strategies to mitigate risks inherent in business acquisitions. Chris emphasizes the importance of thorough due diligence and creative financial structuring to protect against unforeseen challenges. Jack reinforces these points, advocating for structures that allow flexibility and safeguard the buyer's investment without stifling growth potential.

Key Strategies:

• Due Diligence: Comprehensive analysis of financials to uncover any "skeletons in the closet."
• Flexible Deal Terms: Incorporating clauses that allow adjustments based on performance and unforeseen expenses.
• Professional Support: Engaging top-tier CPAs and legal experts to navigate complex transactions.

Notable Quotes:

• Chris Barr [24:07]: "We've got a very, very thorough list and a very, very good accountant."
• Jack Carr [28:08]: "It's a gross margin game because realistically, expenses go up. You don't just eat expenses, you raise your price to match the rate of your expense increase."

Discussion on Deal Structures: Earnout vs. Revenue Share

[33:08 - 45:25]

Jack and Chris engage in a deep dive comparing earnouts with revenue share agreements. They explore the advantages and disadvantages of each, particularly in the context of risk exposure and growth incentives. Chris opts for an earnout structure to cap his financial exposure while maintaining motivation to achieve performance targets.

Earnout vs. Revenue Share:

• Earnout: Provides a structured payment based on attaining specific financial milestones, offering a balance between immediate payment and future performance incentives.
• Revenue Share: Offers ongoing payments based on the company's revenue, aligning seller and buyer interests but potentially exposing the buyer to variable financial obligations.

Notable Quotes:

• Jack Carr [37:05]: "Everybody has different life goals... If your goal is to make $200,000 a year, run this business, then this is a great lifestyle business for you."
• Chris Barr [44:19]: "We're very risk-averse in that perspective."

Lessons and Insights

Risk-Tolerant vs. Risk-Averse Approaches: Chris’s Marine Corps background instills a high level of discipline and risk aversion in his business dealings. This contrasts with more aggressive growth strategies, highlighting the diversity in acquisition strategies based on personal risk tolerance and business goals.

Team Preparedness: The necessity of having a reliable support team is underscored. Chris's success is attributed to his preparedness—having experts on board for due diligence and legal matters ensures swift and informed decision-making.

Importance of Relationships: Building strong relationships with brokers and sellers can expedite deal-making processes and open doors to exclusive opportunities. Chris’s rapport with the listing broker was pivotal in securing the pressure washing business.

Notable Quotes:

• Chris Barr [27:11]: "We are very granular on due diligence."
• Jack Carr [34:06]: "If you ever want to grow and there's reasons to grow... make sure if you decide you don't want to grow, that's okay. But just watch the debt burden on the business."

Conclusion

Episode #216 of the Owned and Operated podcast offers a comprehensive look into the complexities of business acquisitions within the home service industry. Through Chris Barr’s experiences, listeners gain valuable insights into effective deal structuring, risk mitigation, and the importance of a prepared and supportive team. The discussion underscores that successful acquisitions are not merely about financial transactions but also about strategic planning, relationship building, and aligning deals with personal and business goals.

Final Notable Quote:

• Jack Carr [45:25]: "This is how ETA is because there's a thousand ways to skin this cat. And realistically, the creative portion is up to you and the seller."

For more insights and actionable advice on growing your home service business, visit www.ownedandoperated.com.