Buyers and Builders
00:00:00 · Mikk, Nathan Lindley
[00:00:00] S0: My guest today is Nathan Lindley, the CEO of Lindley Home Services, a residential HVAC company with locations in Dallas and Austin. They've done 11 acquisitions and they have a run rate of around 16,000,000 in 2026. Nathan, thanks a lot for coming to the Buyers and Builders podcast today. [00:00:22] S1: Absolutely, Nick. It's fun, buddy. [00:00:25] S0: Before talking about the the the early days, give us the... Maybe the timeline at the overview of the portfolio today. [00:00:33] S1: Yeah. Okay. So, like, first acquisition and all that? [00:00:37] S0: Yeah. [00:00:38] S1: Okay. So we closed on our first deal in February 2020, and I was literally watching the news on the outbreak of COVID on the cruise ship while I was waiting to go in and send my SBA loan for our first deal. So that was how it started. And then... So it's February 2020. In November 2020, we did number two. And then the timeline gets a little fuzzy after that. It was... We kinda hit, like, a one one per year cadence for about four years, and then it accelerated to three or four a year most recently. So... But we just closed on deals number ten and eleven here in March and May respectively. So... Yeah. So we're we're doing good. [00:01:24] S0: Where were you financially before the first acquisitions? And why you decided to go down this route? Because you don't have a b or investment banking background. You were running a very different business, so maybe you can talk about this as well.
00:01:39 · Nathan Lindley
[00:01:39] S1: So my background is I grew up in Portland, Oregon. My dad, was in ministry. So he would he would travel and preach all over the country. And so, as kind of an outcropping of that, we started a Christian book publishing company. We would, basically ghostwrite books for a lot of my dad's, pastor friends. And so we did that for fifteen years, kinda had visions of what it could turn into and just kinda never did. And so after fifteen years, we were really burnt out, on that and and never really made great money. So after about fifteen years, were really tired and hadn't really scaled the way we had hoped. But one of the things I had learned along the way was that I wanted to be in something that was very nondiscretionary because our product and our service was extremely discretionary. That was kind of the thing that we kept running into is there were always other uses for our customers' money than our service. And so I started looking around trying to find something. Basically, my thought experiment was this. If I lost my job and I got a bill today, what bill would I call my dad to borrow the money to to pay this this bill? And so I started thinking through like, well, you know, if my roof was leaking or if, you know, my plumbing was was broken. And so one of the things that was on that list was HVAC. And because my dad had been this this had a really wide network of friends, he had a friend down in Texas who owned an HVAC business for twenty some odd years. And so I reached out to this guy and said, hey, I'm thinking about getting into HVAC. If I gave you an equity percentage in whatever I bought, would you consult with me and, you know, teach me, the industry? And so he agreed. And, my wife and I, I'd gotten married in that time frame, and I had always... I read the the Rich Dad Poor Dad book, which, you know, is kind of a lot of people's, you know, first drug in this whole, you know, investing world. And I had I had been smitten by this idea of of owning rental property. And so I'd always wanted to do that. I didn't know anyone in my social circle who had ever owned rental property. So we had bought a four unit apartment complex and we had lived in one of the units, rented out the other three, and we bought it at a great time. Was like 2013 and things were just kind of coming back from the crash.
00:03:51 · Nathan Lindley
And so we did really, really well in that property. So that was in Portland. So we ended up selling that property, made like 350,000 on it, which was like all the money in the world to me at the time. I couldn't even imagine having that kind of money previous to that. And so we we took that equity and we moved to Texas and we bought our first acquisition that was in February 2020. And I followed the right playbook, but I did everything wrong, if that makes sense. Like, I had an operating partner. I had some guy consulting with me who I thought knew the industry, but I just didn't do a very good job of vetting him. And and also, you know, I... Because I didn't have a private equity or an investment banking background, I didn't understand the concept of a platform or anything like that. So my logic was, I'm gonna dip my toe into this and just kind of learn it on the cheap. And so I ended up buying a very small operation. It was the owner and one technician. And my logic was, well, this business has been around for thirty years, so I'm just gonna buy it, not change anything. The technician already knows how the business should be run anyway. So I'm just going to let him do what he does every day and I'm just not going to not mess with anything and it shouldn't break. And it makes so much sense on the surface, but it just absolutely doesn't happen in reality. Like, there's there's so much stuff that falls apart, like, almost immediately. And so one of the things that I noticed was the the owner was the guy who would answer the phone every day. And so the second that contract was signed and he stepped away and now I'm answering the phone, well, you know, I'm not John. And, you know, so there's this this this... In this immediate incongruity between, you know, in in the transition that all of my customers immediately picked up on. And then on top of that, my technician who's, you know, the guy I was relying on to kind of steer the ship for me, he knew that his boss didn't know anything. And so he could kind of just start doing whatever he wanted and he could just tell me whatever he wanted me to believe. And I didn't really have a lot of baseline. And it turned out that my my partner that I had brought on as kind of a consultant, he's very good technically, but he has kinda just, like, stayed alive for twenty years in the industry.
00:06:05 · Nathan Lindley, Mikk
And I didn't really understand that until I kinda got into it. I started asking him about KPIs. You know, like, how many calls a day should we be running? What should our average transaction value be? And, you know, what what what should be my my different expectations in in all of these areas? And he didn't have any answers for me because he had never thought to measure these things in his own business. And so that's when the veil was kind of lifted from my eyes, and I realized kinda what I had gotten myself into. And, you know, I had taken out this, you know, $850,000 SBA note on a company that, you know, was rapidly losing value. And it it got really intense really quickly. So [00:06:44] S0: So this company just had this owner and one technician. That's all? [00:06:48] S1: Correct. Yeah. Correct. [00:06:51] S0: Correct me if I'm wrong. Why you ever considered acquiring this business instead of just maybe hiring one technician and just started doing those sales calls yourself?
00:06:51 · Mikk, Nathan Lindley
[00:06:51] S0: Correct me if I'm wrong. Why you ever considered acquiring this business instead of just maybe hiring one technician and just started doing those sales calls yourself? [00:07:03] S1: Well, I mean, that's that's a it's a great question. And my my rationale at the time... And and actually, there's still aspects of this that I that I subscribed to is that that phone will ring tomorrow and people people know this phone number and know this... The name of this company as their HVAC provider. And and so that was that was my rationale versus going out and you're greenfielding something where you're starting it from scratch. I didn't know how to make the phone ring, you know? And so that was really what I was buying was just the assurance that tomorrow the phone's gonna ring. That was the rationale. Also, again, my my logic was I'm just not gonna change anything. This company had made $250,000 a year for the last bunch of years. And so if I don't change anything, I should get the same result. Was was my my logic. Now, again, I'm not saying that I was I was clearly very wrong in my logic because that was the logic trend that I was pursuing. And so as long as they don't change anything, that phone should ring tomorrow, I should make $250,000 a [00:07:58] S0: So how much revenue did you lose within the next ninety to a hundred and twenty days post post acquisition?
00:07:58 · Mikk, Nathan Lindley
[00:07:58] S0: So how much revenue did you lose within the next ninety to a hundred and twenty days post post acquisition? [00:08:03] S1: Oh, man. I don't even know. But what what I... Again, there's just... You know, you don't know what you don't know. One of the things that I didn't really fully appreciate was how much of this guy's revenue came from general contractor relationships that he had and that I was not successful in in carrying on. And that was probably 40% of his revenue. And so it got cut massively in that transition period. And so, yeah, that was... [00:08:31] S0: Yeah. So going from not knowing how to make the phone ring, you had to very, very quickly make sure the phone starts ringing. Otherwise, you're in a big trouble. So what