Matthew Railla, owner of Top Termite, shares his remarkable journey from business broker to hands-on entrepreneur in the termite inspection field. He discusses the challenges of buying a $500k business and the importance of rigorous mentorship. Matthew reveals the pain of crawling under homes to learn the trade and the labor-intensive realities of pest control. He also touches on navigating SBA loan options and the strategic visions he has for expanding his business in a competitive market. His story reflects resilience and commitment to craftsmanship.
Matthew Railla's hands-on approach in acquiring a termite inspection business enabled him to deeply understand the operation by learning the trade himself.
His background in family entrepreneurship and business brokerage equipped him with valuable insights, which helped him navigate the complexities of buying a business.
Matt's strategic vision includes expanding his termite inspection business beyond Los Angeles, indicating his commitment to scalable growth and operational excellence.
Deep dives
Unique Acquisition Approach
Many entrepreneurs interested in trades businesses typically lack hands-on experience in fields like HVAC or plumbing, often depending on the teams they acquire for service delivery. However, Matt Rayla, a former business broker, took a different route when he stumbled upon an unsold termite inspection business in LA. After realizing the potential of the business and building trust with the retiring owner, Matt decided to buy the business himself. This meant learning the trade firsthand, which involved crawling under houses to conduct termite inspections, showcasing a commitment to genuinely understand and engage with the operational side of the business.
Background and Transition to Business Broker
Matt’s journey into entrepreneurship began with a background steeped in family businesses, including a winery that he managed for six years. After the winery faced challenges, he shifted gears and turned to business brokerage, where he acquired valuable insights into evaluating and selling businesses. His experiences as a business broker provided him with a unique perspective, preparing him for the key challenges of purchasing the termite inspection business. Amidst this transition, he also experienced personal hardships, highlighting the emotional strain of starting over at the age of 32.
Challenges in Selling the Business
The termite inspection business initially generated a lot of interest, attracting multiple buyers, including private equity groups and larger pest control companies. However, as potential buyers learned more about the business model—specifically, the lack of recurring revenue—it deterred them from pursuing the deal. Many buyers were hesitant to step into a role that required them to understand the intricacies of termite inspection and the essential relationships with real estate agents. Ultimately, most buyers walked away, prompting Matt to contemplate acquiring the business himself as a solution to the challenge.
Innovative Financing Structure
After deciding to acquire the business himself, Matt explored various financing options, initially proposing a high percentage of seller financing. However, the seller required a substantial down payment to mitigate risk, leading Matt to reconsider financing strategies. He ultimately structured a deal utilizing an SBA loan that allowed him to buy 85% of the business while the seller retained 15%, ensuring the seller remained involved for two years. This structure not only provided necessary cash flow but also created a mentorship dynamic, facilitating a smoother transition and ongoing support.
Vision for Growth and Expansion
Matt's vision extends beyond merely running the termite inspection business. He sees the potential to build a termite inspection empire in Southern California by expanding into new territories like Orange County. His immediate plan includes hiring additional inspectors to enhance operational capacity, allowing him to maintain high service standards and continue growing the customer base. Matt’s commitment to learn the trade personally positions him for future success, as he aims to transition from technician to strategist and leader in the business over the coming years.
