Podcast Summary: Service Business Mastery for Skilled Trades – The Truth About Selling Trades Businesses for Maximum Value with Gregg Schonhorn

Date: July 9, 2025
Hosted by: Tersh Blissett
Featured Guest: Gregg Schonhorn (SF&P Advisors)
Episode Theme: Maximizing the value and smoothness of selling a skilled trades business, with a focus on the realities of valuation, key operational insights, and the evolving role of automation and AI in the trades.

Episode Overview

In this insightful conversation, Tersh Blissett sits down with mergers and acquisitions expert Gregg Schonhorn, tackling the complexities of selling home service businesses (HVAC, Plumbing, Electrical, etc.) for top value. Gregg draws on his vast experience (427 transactions, $3.6B in value) to demystify how business value is determined, what buyers are really looking for, and how trends like automation and AI are beginning to shape the conversation—though they haven't yet transformed business valuations. The episode is a rich blend of practical wisdom, industry anecdotes, and hands-on advice for owners who are thinking about an eventual exit.

Key Discussion Points & Insights

1. How SF&P Advisors Supports Sellers

• What They Do: SF&P Advisors acts like an "investment banker meets real estate broker" (03:18) for service businesses, representing sellers at various stages of readiness—from 2-3 years out to ready-to-exit owners.
• Strict Process: They interview potential sellers to ensure realistic expectations and a proper fit before engagement.

2. Valuation Realities: What Drives Business Value (04:50–05:57)

• Not All About the Brand: While many owners overvalue their company based on their logo or personal pride, buyers care far more about financials, C-suite structure, business mix, customer concentration, and cultural maturity.
  • Memorable quote: "There can only be so many amazing brands and everybody thinks that they've got the greatest brand... At the end of the day, Tersh, brand matters a lot. But culture matters. Your C suite matters, your profitability matters..." (04:50 – Greg)
• Why Now?: The first question in any seller interview: "Is it 'I'm tired'? Is it the money? Do they need a partner? Everybody's motivation is different." (05:22 – Greg)
• Deal Structures: Many transactions involve the seller "rolling equity" (keeping a share in the new platform), which can become lucrative in future resale events (06:47–07:24).

3. Private Equity & the PE Timeline (07:26–09:39)

• PE's goal is to bundle, scale, and sell—often in a 5–7 year window.
  • "Part of the questions you should be asking... where do you guys think you are in the process [toward exit]?" (08:21 – Greg)
• Cautionary Tales: Extremely fast exits, like Horizon and Sun after just 2.5 years, are exceptions, not norms.

4. Biggest Value Killers & Optimization Advice (10:18–12:16)

• Expense Control: Total expenses should ideally be at 30%—most businesses creep to 35–40% due to poor cost controls and overpaying C-suite without incentives.
  • Quote: "We overpay C suite too much. Everybody should be salary plus a bonus. We shouldn't be salary without bonus. We all want everybody rowing the boat in the same direction." (10:18/12:03 – Greg)
• Gross Profit Realities: While 60% GP is aspirational, most deals see companies at 50/50 GP/COGS.
• Adjustments: Overpaying key employees without bonuses leads to negative adjustments at sale.

5. Growth, Plateau, & Shrinking to Grow (13:10–15:45)

• As businesses grow (esp. from $1 million to $10+ million), net margins often squeeze due to C-suite hires and overhead, making profit harder to maintain.
• Sometimes, shrinking and "getting leaner" is preferable to brute-forcing more revenue if net profit tanks.
  • Advice: "I'd rather see you spend the next two years getting leaner, growing...and get yourself to where you need to be." (14:53 – Greg)
• Don’t Coast Pre-Sale: Taking your foot off the gas during the 7-month deal timeline can tank your valuation and saleability. (15:59–16:24)

6. Being 'Too Lean' vs. Optimally Automated (16:54–19:47)

• Too Lean: Not enough staff or a shallow org chart makes your company less valuable since private equity must add those roles at cost.
• Automation & AI: Most truly "AI-first" or deeply automated businesses haven't reached the market yet; maturity in delegation, automation, and a robust team is still paramount.
  • Overly lean operations suffer if core human infrastructure is missing; buyers want to acquire proven teams, not just tech or owners.

7. Industry Vertical Observations: Roofing vs. HVAC/Plumbing/Electric (18:00–18:43)

• Maturity varies; roofing can scale revenue extremely fast but often lags in organizational buildout compared to HVAC, plumbing, and electric sectors.

8. Business Mix – The Value of Residential vs. Commercial (26:56–28:43)

• Residential Reigns Supreme: Residential service businesses demand higher multiples, especially those with large maintenance agreement bases.
• **Commercial businesses are less rare but often less valuable per dollar of EBITDA due to risk and scale.

9. Current and Future Role of AI & Automation in Valuation (29:00–31:46)

• Buyers and AI: Current buyers aren’t yet paying more for AI-driven or heavily automated businesses, though this is expected to evolve.
  • Quote: "I have to think that there will be some impact [on multiples], just there's no proof of that as of yet." (31:16 – Greg)
• Questions on Tech Stack: It's the third thing buyers ask about after C-suite and marketing funnel—showing rising importance but not yet dominance. (32:00–32:42)

10. The C-suite, CTOs, and 'Org Chart of the Future' (33:22–36:35)

• CTOs are not standard yet, but fractional CTO services may fill this gap as more businesses seek to optimize with automation and AI.
  • Quote: “You guys really are at the forefront... If I'm going to own a business for the next five years, I better have all this.” (35:04–35:49 – Greg referring to Tersh/Josh's tech work)
• Videography, internal marketing, and tech know-how are growing in C-suite relevance.

11. Fractional CFOs – Underappreciated but Vital (37:06–41:17)

• Valuation Impact: Whether fractional or in-house, a CFO with transaction experience is a huge value add.
  • "Many businesses use a local CPA and they're lazy, they're cash based. Every single business needs to be...at a bare minimum accrual based." (37:48 – Greg)
• Financial Discipline: Business owners must evolve to full accrual accounting, forecasting, and KPI-driven management by $4–5 million in revenue.

12. Tech Platform Standards (41:17–42:38)

• Most buyers want to see financials on QuickBooks Online and operations on ServiceTitan; future shifts are possible but the current standard is entrenched.

13. Industry Outlook, Multiples & What’s Next (43:03–44:21)

• Multiples Hold Steady: Quality $1M+ EBITDA businesses can still secure 9–10x multiples.
• Next Gold Rush: Significant multiple increases may await the first major public offering of a PE-backed home service group.

Notable Quotes & Memorable Moments

• On Overvaluing Brands:
  • "There can only be so many amazing brands and everybody thinks that they've got the greatest brand." (04:50 – Greg)
• On C-suite Compensation:
  • "Everybody should be salary plus a bonus. We shouldn't be salary without bonus. We all want everybody rowing the boat in the same direction." (10:18 – Greg)
• On Business Fatigue:
  • "There are certainly guys that have come to us that are burnt out, that are tired, that aren't worried about the last half a million..." (12:25 – Greg)
• On Lean Operations:
  • "You've got redundancy throughout your business. I'd rather see you spend the next two years getting leaner..." (14:53 – Greg)
• On Growth:
  • "Continue to grow your business like you're not selling. Even when you come to me and are ready to sell, man, it's a seven month process." (15:45 – Greg)
  • "The worst thing you could do is take your foot off the gas during those seven months." (16:08 – Tersh)
• On Tech & Automation:
  • "It's almost impossible to find a 15, $20 million [HVAC/Plumbing/Electric] business that doesn't have a CMO, CFO, all that stuff." (18:06 – Greg)

Timestamps for Key Segments

• SF&P Advisors and Gregg's Background – 03:18–04:17
• Seller Psychology and Valuation Approach – 04:17–05:57
• Equity Rolling and Deal Structures – 06:02–07:24
• Private Equity Timelines & Fireside Chats – 08:21–09:39
• Biggest Value Killers: Expense Control – 10:18–12:16
• Owner Fatigue and 'Quick Sale' Mindset – 12:25–13:09
• Scaling & Margin Compression – 13:10–15:45
• Too Lean vs. Too Fat Org Charts – 16:54–19:47
• Industry Sector Comparisons – 18:00–18:43
• Business Mix & Maintenance Agreements – 26:56–28:43
• AI/Tech Stack Questions in Acquisitions – 29:00–32:42
• CTOs and Org Chart Evolution – 33:22–36:35
• Fractional CFOs Valuation Role – 37:06–41:17
• Platform Standards (ServiceTitan/QuickBooks) – 41:17–42:38
• Multiples & Public Market Predictions – 43:03–44:21

Final Takeaways

1. Know Your Numbers: Sustainable EBITDA, scalable operations, and disciplined expense control are the ultimate value drivers when selling your trades business.
2. Build, Don’t Coast: Continue to grow and optimize your business right up to (and through) the selling process—buyer confidence depends on momentum, not stagnation.
3. AI & Automation Are Here, But Early: While top buyers are starting to ask about tech stacks, significant valuation premiums for automation/AI aren’t here—yet.
4. C-Suite & Financial Maturity Matter: The right people, proper accounting, and a solid tech stack are increasingly non-negotiable for premium multiples.
5. The Future Is Bright for the Right Seller: Multiples remain strong for mature, well-run, and properly-prepared service businesses—and owners who plan years in advance will reap the biggest windfalls.

Contact & Resources

• Gregg Schonhorn: 973-919-5509 | gregg@sfpadvisors.com
• Podcast Website: servicebusinessmastery.com

This summary was designed to be comprehensive, practical, and accessible for those who missed the live conversation but want the critical insights to navigate or prepare for selling a skilled trades business.