He Sold for $200M – Then Watched the Business Implode
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
Corey Mitchell grew up in the unglamorous blue collar world of asbestos removal in small town Iowa, where his family business generated millions in cash while staying conservative and avoiding debt. (02:38) This episode reveals the messy reality of growing through acquisition, as Corey transformed his $7-9 million lifestyle business into a $200 million exit through strategic M&A. But the story doesn't end with the sale - it includes the near-collapse that followed when the business dropped from $27 million to $12 million in EBITDA in just nine months under new leadership. (23:04) The conversation explores the hidden challenges of integration, managing wealthy founders post-acquisition, and the personal cost of scaling through M&A. • Main Theme: The real-world challenges and opportunities of growing blue collar businesses through mergers and acquisitions, including both the strategic benefits and human costs involved.
Speakers
Corey Mitchell
Corey Mitchell is a serial entrepreneur who grew up in the blue collar asbestos abatement industry in Iowa. Over two decades, he transformed his family's conservative $7-9 million lifestyle business into a national environmental services company through strategic acquisitions, ultimately selling for $200 million in 2021. He now works as a transaction advisor and mentor to blue collar founders, helping them scale and prepare their businesses for sale.
Harry Morton
Harry Morton is the host of Moneywise podcast and founder of Lower Street, a podcast production company. He created Moneywise specifically for the Hampton community of high-growth entrepreneurs, focusing on the strategic and financial decisions that come after the startup phase.
Key Takeaways
Master the Financial Arbitrage of Acquisition
Corey discovered what he calls "magical arbitrage" - buying smaller businesses at 5-6x EBITDA and growing them to a size where they're worth 10-12x EBITDA. (08:01) This isn't just about finding cheap businesses; it's about understanding that scale creates value multipliers. Every time you add a business at a lower multiple, it instantly becomes worth more as part of a larger entity. The key insight is that reaching "critical size" fundamentally changes your business valuation, making each acquisition immediately more valuable than what you paid for it.
Integration Must Happen Early, Not Later
One of Corey's biggest regrets was waiting too long to integrate their acquisitions. When they sold, they weren't fully integrated - different accounting platforms, no centralized ERP or CRM, essentially separate companies under one umbrella. (16:00) This lack of integration cost them 1-2x EBITDA in their transaction valuation. The lesson: invest in systems, unified communication, and aligned incentive programs when you're still small. Corey is now implementing enterprise-level ERP systems with just six employees because he knows where he's headed.
Due Diligence Must Include Deep People Assessment
Private equity often focuses heavily on financial and legal due diligence while neglecting the human element. (13:09) Corey learned this the hard way through several disasters: founders who tried to kill each other post-transaction, and one who secretly started a competing business that destroyed the acquired company's value. His approach now centers on in-person relationship building - always having meals before business meetings, spending real time understanding what people value, and ensuring they truly care about their teams and customers.
Stick to Core Competencies During Growth
The near-catastrophic failure after their successful exit came from abandoning what made them successful. (23:58) Their new CEO pushed them into large industrial projects when they were built for small, high-margin commercial work. Six projects worth $20 million in revenue resulted in $12 million in losses - essentially paying clients to work for them. The turnaround was simple: eliminate bad projects, cut excessive overhead, and return to core competencies. Sometimes the most sophisticated strategy is just doing what you already do well.
Culture and Communication Are Non-Negotiable at Scale
With 37 offices across multiple states, Corey found himself on a plane every week convincing people not to quit. (09:36) The challenge wasn't just operational - it was cultural. In relationship-driven industries, losing key people can devastate revenue because of personal client connections. Building unified culture requires intentional internal communication strategies, aligned incentive programs (they had 12 different plans initially), and helping people understand the shared vision of where the company is headed.
Statistics & Facts
- From $36 million to $70 million revenue through merger, then grew to $120 million through acquisitions. The company sold for $200 million in 2021 with $21 million EBITDA. (22:04)
- Nine months after the sale, EBITDA dropped from $27 million (including new acquisitions) to $12 million due to failed leadership and strategy changes. (23:04)
- Six large projects worth $20 million in revenue resulted in $12 million in net losses, while the company simultaneously added $7 million in overhead expenses. (24:00)
