Ep. 321 — Tommy Mello: Inside the Mind of a Strategic Buyer

7 min read

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Episode Summary

You’ve been told the strategic buyer down the street is your best exit. Same industry, obvious fit, willing to pay a premium. So you sit at your desk and imagine the call. What you don’t imagine is what they actually do with the company the day after closing. I had Tommy Mello on for this one because he’s exactly the buyer most owners daydream about: he took A1 Garage Door from $50,000 in debt and two trucks to $150 million in revenue across 20 states, and he’s now rolling up companies in his space. We got into how he actually thinks about a target (the levers he flips, the people he keeps, the things he kills), how he turns a $1M EBITDA shop into $4M in twelve months, why he gave away 20% of the company in an equity incentive plan, and how he reverse-engineered a billion-dollar number on a whiteboard into a hiring, training, and CRM build. The point isn’t that Tommy is going to buy your business. The point is you get to ask every buyer the same questions he answers without flinching: what happens to my people, my brand, my culture, and the legacy the day after the wire hits.

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## Top 10 Takeaways
  1. The buyer with a premium offer always has a plan for your company. Your job is to find out what it is before the wire hits.
  2. Most owners can name their top five strategic buyers. Almost none can name what those buyers will gut on day one.
  3. Revenue is vanity, profit is sanity. Tommy holds the bottom line between 18% and 22%, not whatever the top line allows.
  4. Reverse-engineer the number. Write the outcome on the wall, then list the five checks that have to clear to get there.
  5. Your average ticket, conversion rate, call booking rate, and CAC are the equation. Fix the weakest link, not the whole machine.
  6. The person who can run a $2B company is not the person who can take you from $200M to $2B. Hire the one who’s done the fight.
  7. If your people don’t have equity in the upside, “they’re so important to me” is just something you say at the closing dinner.
  8. Your dream has to be big enough that everyone else’s dream fits inside it. Otherwise you’re recruiting employees, not partners.
  9. When you’re barely making payroll, you can’t think about culture. The discipline is reinvesting until you can.
  10. Train people to love you because you care. You can’t train them to look in the mirror and believe they’re worth it.

Sound Bites

“Revenue is for vanity and profit is for sanity. So we try to keep our bottom line between 18% and 22%.” (@TBD) — Tommy Mello

“When you get this kind of goal, the outcome, you reverse engineer. Your brain needs to go into this mode of what needs to happen today to get there. It’s not a dream.” (@TBD) — Tommy Mello

“A lot of people, unfortunately, from the private equity, venture capitalist world, they’re very good at looking at pivot tables, P&Ls, balance sheets and income statements, but they have no idea how to run a company.” (@TBD) — Tommy Mello

“My dream needs to be big enough to have everybody else’s dream inside.” (@TBD) — Tommy Mello

“When you’re barely making payroll, you can’t think about culture. You can’t think about what I can think about now. When you’re literally struggling and you’re putting in 12 hours a day working in the business, I used to hate it when people would talk about culture.” (@TBD) — Tommy Mello

“Intentional. I think you have a plan. I think you’re following a mindset with a plan and you’re meaning to do it. So there’s a plan in place.” (@TBD) — Tommy Mello

About This Episode

Tommy Mello is the owner of A1 Garage Door Service, a home services operator he’s grown from $50,000 in debt and two trucks to over $150 million in revenue across 20 states and 29 markets with ~600 employees. He’s the host of the Home Service Expert podcast, author of The Home Service Millionaire, and the founder of Vertical Track and the Home Service Freedom Group. This episode is the strategic-buyer installment in Ryan’s Through the Eyes of a Business Buyer miniseries, which has already covered private equity, family offices, acquisition entrepreneurs, and search funds. Tommy was chosen because he’s the exact kind of operator most owners imagine knocking on their door, and he’s actively rolling up shops in his industry.

Resources Mentioned

  • A1 Garage Door Service — Tommy’s operating company.
  • Home Service Expert Podcast — Tommy’s show, ~40,000 downloads/month.
  • The Home Service Millionaire by Tommy Mello — Tommy’s first book, written with 12 co-authors.
  • Vertical Track — Tommy’s annual event, October 12-14.
  • Home Service Freedom Group — Tommy’s buyer’s group for home service operators.
  • ServiceTitan — The CRM Tommy adopted in 2017 after pursuing CEO Ara Mahdessian directly.
  • The Gap and the Gain by Dan Sullivan & Benjamin Hardy — On living in the gain instead of the gap.
  • Off Balance On Purpose by Dan Thurmon — On intentional imbalance across life domains.
  • The Ultimate Sales Machine by Chet Holmes
  • Built to Last by Jim Collins — On building a company that runs without the founder.
  • Good to Great by Jim Collins — Referenced in Tommy’s framing of leadership.
  • The ONE Thing by Gary Keller — On focused reinvestment.
  • Essentialism by Greg McKeown
  • The Infinite Game by Simon Sinek
  • The Dream Manager by Matthew Kelly — The book behind Tommy’s Dream Manager role.
  • How Much Should I Charge? by Ellen Rohr
  • Who by Geoff Smart & Randy Street — Tommy’s go-to recruiting book.
  • Conscious Capitalism by John Mackey & Raj Sisodia — Referenced by Ryan on the six stakeholders framework.
  • Naval Ravikant — “How to Get Rich” thread — Referenced by Ryan on long, hard, honest wealth-building.
  • Grant Cardone — 10X — Referenced for outcome-scale thinking.
  • Eisenhower Matrix — Tommy’s tool for prioritization.
  • Tony Robbins — On not letting people learn on your dime.
  • Ken Goodrich (Goettl) — The $300M operator Tommy studied to model his own build.

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