Latest / The Buyer & Seller Podcast with Fexingo: Business Brokers, Exits, and Private Sales Explained / Why a Tiny Printer Repair Shop Sold at 14x EBITDA
Transcript
- Lucas: There's a two-person printer repair shop in Omaha that just sold for fourteen times EBITDA. And the buyer wasn't some mom and pop — it was a regional office-supply consolidator that normally only looks at companies with fifty-plus employees. Luna: Wait — a printer repair shop? Like fixing broken copiers at dental offices? That's about as commodity as it gets. How do you get a multiple like that? Lucas: Exactly the question. The owner — former HP field technician named Carl — figured out something most service business owners miss. He stopped selling repairs and started selling the absence of downtime. Luna: So he reframed the product. Not 'I fix your printer when it breaks' but 'your printer never breaks.' Lucas: Right. But here's the concrete mechanism. Over three years, Carl built what he called a 'service ladder.' Every time a client called for a repair, he offered them a contract for managed print services. Toner replenishment, quarterly maintenance, next-business-day on-site. Lucas: And if your office relies on a single copier to process invoices, that next-business-day promise is gold. He started with the five most frequent callers, got them on annual contracts at five hundred dollars a month, then used those as case studies. Luna: So he converted one-off repair calls into recurring revenue. That alone would boost the multiple. But fourteen times is still high for a two-person shop. Lucas: It is. And the key detail is that by the time he sold, eighty-five percent of his revenue was under annual contract. Buyers love that because it's predictable. But there's another layer — he designed the contracts so that the hardware lease and the service agreement were bundled. Luna: Meaning if a client cancels the service, they lose the printer too? That's a pretty strong lock. Lucas: Exactly. He wasn't just selling service — he was selling a hardware as a service model. The client never owns the machine, they just pay a monthly fee that covers everything. Carl got a cut of the hardware margin and the service margin. Double dip. Lucas: And that's the kind of structure that gets a consolidator interested, because they can drop the same model into every other market they operate in. Luna: So the buyer wasn't buying Carl's customer list — they were buying the playbook. The service ladder itself. Lucas: That's exactly what the broker told me. The buyer's CEO said, 'We've been trying to figure out managed print for three years. Carl's got a system that works in a small market. We can scale it across twelve.' Lucas: And if those conversations have moved your work forward in some small way, that's the whole reason we do this. We deliberately don't run ads on these episodes, and listener support is what lets us keep it that way. Luna: Yeah, it's genuinely ad-free, and that's rare for a business podcast. If you want to support that choice, the link is buy me a coffee dot com slash fexingo. Lucas: So back to Carl's deal. The broker told me the multiple actually started at eight times. The buyer's first offer was eight times trailing twelve-month EBITDA. Carl countered at fifteen. They settled at fourteen. Luna: What gave him the confidence to counter that high? Most small business owners would take eight and run. Lucas: Two things. First, he had three years of contract renewal data showing less than five percent churn. Second, he had a waiting list. He was actually turning away new clients because he couldn't service them alone. Luna: He created artificial scarcity. 'I can't take you on because I'm too busy' — that actually increases perceived value. Lucas: Exactly. And he used that in the negotiation. He said, 'I have more demand than I can handle. If you buy me, you immediately get that pipeline.' The buyer could see that ramping up revenue without needing to generate new leads. Lucas: There's a specific number that stuck with me. Carl's average contract value was six thousand dollars a year per client. He had forty-two clients under contract. That's two hundred fifty-two thousand in recurring revenue, basically zero marginal cost to service each additional client once the system was set up. Luna: So the buyer saw that and thought, 'I can add fifty more clients in year one without hiring another tech.' Lucas: Right. And the buyer already had a sales team selling office supplies to those exact businesses. They could cross-sell the managed print service to their existing customer base. That synergy is what pushed the multiple up. Luna: It's almost like Carl built a productized service that happened to be delivered by him. The business didn't depend on his personality — it depended on the contract structure. Lucas: That's the key insight. If the business relies on the owner being the technician, it's worth maybe three times EBITDA. If it runs on contracts and systems, it can hit double digits. Carl stopped being a repairman and became a contract manager. Lucas: And he did it without any fancy software. He used a spreadsheet to track contract renewals and a calendar for quarterly maintenance visits. The system was manual but replicable. Luna: So the lesson for any service business owner listening is: stop selling the fix, start selling the guarantee that nothing breaks. Lucas: Exactly. And bundle it with a physical asset if you can. Carl's hardware lease lock was the real genius move. Most repair shops don't lease the equipment — they just fix what the customer already owns. By controlling the hardware, he controlled the relationship. Luna: It's almost like a SaaS model but for printers. Hardware as a service, with a service-level agreement baked in. That's much harder for a customer to leave. Lucas: It is. And the buyer confirmed that. They said their own analysis showed that clients under a hardware plus service contract churn at less than two percent annually, compared to fifteen percent for service-only contracts. Luna: So the multiple premium comes from the stickiness of the recurring revenue, not just the fact that it's recurring. Lucas: Right. And Carl's story is particularly interesting because it's so small. We talk a lot about companies doing tens of millions in revenue. This was a guy doing three hundred grand a year, working out of a 1998 Ford Ranger with a printer in the back. Lucas: But he built an asset that a larger company could plug into their existing infrastructure. The buyer isn't paying for the revenue — they're paying for the template. Luna: What's Carl doing now? Did he stay on? Lucas: He stayed for six months to train the new techs, then left. He's actually fishing in Florida. But the broker told me the buyer already signed up twelve new clients from their existing customer base in the first quarter. The template worked. Luna: That's the happy ending. A two-person shop sells for a multiple that most SaaS companies would envy, and the buyer gets a scalable system. It's a win-win. Lucas: It really is. And it makes you wonder how many other 'commodity' service businesses are sitting on a structure that could unlock a double-digit multiple. Maybe the next episode we find one.