Latest / The Buyer & Seller Podcast with Fexingo: Business Brokers, Exits, and Private Sales Explained / How a Pressure Washing Business Sold at 200x EBITDA with Route Density Data
Transcript
- Lucas: Let's talk about a pressure washing business in the suburbs of Atlanta that sold for 200 times EBITDA last year. Luna: Two hundred times? That's double what we saw with the dog daycare in episode 109. What made this one so extreme? Lucas: The buyer wasn't buying earnings. They were buying route density. The business had about 80 commercial accounts — strip malls, gas stations, fast food drive-thrus — all within a 15-mile radius. The owner had been meticulously mapping every location, every service frequency, every travel time. Luna: So it's less about profit margin and more about how tightly the routes are packed? Lucas: Exactly. The buyer was a publicly backed facility services roll-up that already owned commercial cleaning, window washing, and parking lot sweeping companies across the Southeast. They had 12 different branches in Georgia alone. What they needed was density to make those branches more efficient. This pressure washing business gave them 80 nodes right in the middle of their existing territory. Luna: What were the actual numbers? Give us something concrete. Lucas: The business generated about $180,000 in EBITDA on roughly $600,000 in revenue. Standard pressure washing margins. Nothing exceptional. A typical buyer might offer three to five times EBITDA — call it $700,000 to $900,000. The roll-up paid $36 million. Luna: Thirty-six million dollars for a $600,000 revenue business? That's wild. Lucas: It sounds insane until you see the buyer's logic. They calculated that adding those 80 accounts to three of their existing branches would save each branch roughly one full-time route manager and about 15 percent in vehicle fuel and maintenance costs. They estimated the density synergies at $1.2 million per year in savings. On top of that, they could cross-sell their other services to those same accounts — add window washing contracts to 30 of them, and that's another $400,000 in incremental revenue with almost no acquisition cost. Luna: So the $36 million was justified by the savings and cross-sell upside, not by the pressure washing profit itself. The deal was really a logistics acquisition. Lucas: Right. And the seller had done something very smart. He kept a detailed spreadsheet with every account's address, service frequency, average time on site, and distance from the next account. He also had a map with color-coded clusters showing how his routes minimized drive time. When the buyer did due diligence, they could model the integration in about a day. That documentation is what let them move fast and pay a premium. Luna: So the lesson for service business owners is: document your geography as carefully as your finances. Lucas: Exactly. Most owners track revenue and costs, but they don't think about route density as a sellable asset. In this case, the density data was more valuable than the income statement. Luna: What kind of buyer would pay that multiple? I imagine it's not a typical private equity firm. Lucas: It's usually a strategic buyer that already operates in the same geography and has a fixed cost base they need to spread over more accounts. In this case, it was a roll-up that had already invested in a hub and spoke model with regional warehouses, dispatch centers, and management teams. Adding more nodes to the existing spokes has huge marginal value for them. A standalone PE firm wouldn't pay that because they don't have the existing infrastructure to monetize the density. Luna: So if you're a small business owner listening, how do you know if your business has this kind of hidden density value? Lucas: Look at three things. First, how many of your accounts are within a 10-mile radius of each other? Second, what percentage of your service calls happen in that core zone? Third, can you map your routes in a way that shows minimal overlap and maximum coverage? If your answer is that 70 percent of your accounts are in a tight cluster, and you can prove it with data, you might have a buyer willing to pay a huge multiple. Luna: And if you don't have that data, start collecting it now. Lucas: Absolutely. The seller in this case spent about 20 hours a year maintaining that route map. That investment returned $36 million. Luna: That's a pretty good hourly rate. Lucas: It really is. And it's a reminder that in service businesses, the asset isn't just the customer list — it's the geography of that list. Luna: I want to hear more about how that roll-up structures these deals. Do they typically pay all cash, or is there earn-out? Lucas: In this deal, it was about 60 percent cash at close and 40 percent in seller notes amortized over three years. No earn-out tied to performance, because the buyer didn't need the seller to stay. They just wanted the routes. The seller was a guy in his late 50s who wanted out, so a clean exit worked for him. Luna: So the multiple even accounts for the fact that the owner isn't staying. Lucas: Right. The buyer was paying for the physical density, not the human capital. That's the key distinction. Luna: This kind of episode really makes you think about what you're actually building. If you're a service business owner, you might be sitting on a goldmine of geographic data and not even know it. Lucas: And if these conversations have moved your work forward in some small way — maybe you're mapping your routes differently, or thinking about who your real buyer might be — a couple of dollars a month is genuinely what keeps these going. Buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: Yeah, it's a small thing that makes a real difference for the team. Lucas: Alright, back to the deal. One more detail I found interesting: the buyer required the seller to provide a full year of service logs showing exact arrival and departure times for each account. They wanted to verify the route efficiency wasn't just theoretical. Luna: That makes sense. If you're paying that kind of multiple, you want proof the routes are as tight as advertised. Lucas: Exactly. The seller had been using a simple gps enabled app on his phone to log times. He exported that data into a spreadsheet each month. It took maybe 10 minutes a week. That small habit turned out to be worth tens of millions. Luna: I think that's the takeaway most owners can act on today: start logging your route data. Lucas: Absolutely. Next episode, we'll look at a different kind of hidden value — intellectual property in a service business. But for now, if you're a route-based operator, go map your territory.