I just sat down with Nick Bartolo for the podcast, and I left with a full page of notes. Nick runs Essential Partners, a wealth management firm that works mostly with home service owners like us. Pest control, lawn care, weed control. That's his world.
Before this he spent almost 20 years on Wall Street picking stocks and bonds for big funds, and he met with CEOs all over the world. Then he started his own firm. Now he helps owners sell their business and keep more of the money when they do.
We talked for an hour and a half. Here are the lessons that stuck with me.
This one comes up all the time. Someone does $250,000 a year and thinks the business is worth three times that. Nick hears it too, and a guy called him doing exactly that. Nick told him the truth, which is that at that size you're worth about one times.
Here is why revenue multiples are a bad way to think about it. Say your business does $100 in revenue and you claim you're worth three times. But then Nick asks about your margins, and you say 10%. That means you make $10 in profit and you want $300 for it.
"That's a 30 times multiple and there's no chance," Nick said.
Buyers don't care about your revenue, they care about your cash flow, because that's all they're really buying. Two shops can do the same revenue, but one makes 10% and the other makes 20%. They are not worth the same money.
Be honest about where multiples are headed
A few years back you heard wild numbers like 17, 18, and 20 times EBITDA. That was during COVID, when money was cheap and private equity was pouring into the space.
Nick thinks those days are mostly behind us now. Rates went up, and private equity is having a hard time selling the businesses they already own, which puts pressure on prices.
He made a point that really stuck with me. Microsoft is one of the best companies on earth, and it still traded at less than eight times EBITDA for three or four years. So thinking your pest control shop will fetch 20 times is a stretch.
He's not trying to talk anyone down, and he wants us all to win big. He just wants us ready, because rosy plans tend to lead to letdowns.
Run the numbers before you sell
Nick has a tool he calls a possible paths analysis. You model out your business and ask where revenue can go, but more important, where EBITDA can go. Then you look at the value at different times and under different multiples.
Say you have a $50 million offer today at 15 times and you turn it down to keep growing. But what if multiples drop to 12 in three years? You could grow the business and still walk away with less, and you'd want to know that before you say no.
He said most owners just don't do this work. They pick a round number like $100 million and aim for it, with no real math behind it.
I had a call this week that proves his point. A guy with a weed control company doing $6.5 million in revenue at 29% margins got an offer around 12 or 13 times EBITDA. He asked me if he should hold, and I didn't answer that for him. But this is exactly the work Nick would walk him through.
What got you here won't get you there
That same guy said he could run a $6.5 million company but wasn't sure he could run a $15 million one. Nick gets why that feels scary.
"What got you to 6.5 million is not going to get you to 13, 14, 15 million," he said.
But that's not a reason to quit, it's a reason to grow. You just have to get better at the parts where you're weak, and we all started somewhere. And think about it this way: that guy earns a 29% return inside his own business. Where else are you getting that on your money?
Get a CPA who saves you money
Nick is a CPA himself, but his firm doesn't do taxes. His advice was simple, which is to get a CPA who hunts for savings instead of one who just files your forms.
I made this switch a while back and it was a massive unlock. A compliance CPA only files your stuff, while a value CPA looks for ways to save you money. The wrong fit can leave tens of thousands of dollars on the table.
He gave one more tax tip worth repeating. Don't buy a truck just to dodge taxes, because lots of owners do it and most don't need the truck. The write-off isn't even what it used to be either. Bonus depreciation was 100%, but last year it dropped to 60%, so the math is worse than you think.
Start a Roth IRA today
This part is for everyone, including owners, techs, salespeople, and admins. Nick says step one for building wealth is opening a Roth IRA.
You put in after-tax money each year, with a current limit of $7,000, and it grows for decades. When you pull it out after age 59, you never pay tax on it again.
When you run the numbers it gets fun. Say you and your spouse both put in $7,000, which is $14,000 a year, and you keep it up for 25 years at 8% growth.
"That's a million bucks in 25 years and you never have to pay tax on that again," Nick said.
That works out to about $1,100 a month. It isn't easy for everyone, but it's a real path to a million dollars.
Find the one lever that moves the business
Nick loves Charlie Munger, and Munger said business is often about maximizing or minimizing a few key things. For us, the big one is the lifetime value of a customer.
Keep your customers longer and you spend less to replace them, which makes every marketing dollar work harder. So you have to know your numbers, your LTV, and your CAC.
This hit home for me. When I started I worked on everything, including little stuff that didn't matter much. The business changed once I found the few levers that actually move the needle. Stop sweating the 5% wins and go find the 30% one.
Don't marry the master plan
Here's the one that surprised me most. Nick brought up Munger again, along with his book Poor Charlie's Almanack.
At Berkshire Hathaway, Munger said, "there was never a master plan. We never had any strategic plans. We never had any long-term goals because plans end up taking a life of their own."
That sounds backwards, since we're all told to set big goals, and I still think goals matter. But you have to stay loose because the world changes. If you lock onto a plan too hard you can spend yourself broke chasing it while your profit and route density slip away.
Culture is a real thing
I used to think culture was just a buzzword and a bunch of noise, but I was wrong about that. Nick pointed to the team behind Saela, the company Rollins just bought, and he spent real time with the owners.
"I've never seen people treat other people better than Andrew, Blaine, and Daniel," he said.
Pest control is a people business through and through, since your techs, your customers, and your suppliers are all people. When you treat them right it shows, and people feel it the second they walk in the door. I've had folks visit my shop and say the same thing. They can't always explain it, but the energy is different, and that's culture. It starts with you leading from the front.
The big picture
One line tied it all together for me. Nick said the way you get rich and the way you stay rich are not the same thing.
"The way that you get rich is that you grow a concentrated asset," he said. You pour everything into one business and build it up, but once you sell, you spread that money out. As he put it, the way you stay rich is diversification.
So build the one thing now, run the numbers on everything, and know what your business is really worth. When the day comes to sell, you'll be ready.
