I was going through a hard time at that time. I was getting a divorce, and I had to clean out my belongings from my house and move them into a new place. The new place was nice and very spacious, but it had flooded two days before I had closed the escrow on it and there was a bunch of work that had to be done. By the time Sean arrived, there was still plastic up on some of the walls and mold remediation was happening. By this point, I didn’t really care what people thought about me so I didn’t care if he came and stayed there.

When he arrived, I asked him when his return flight was and he didn’t have an answer. He hadn’t booked one. I was kind of shocked but I went with it. He told me that he wanted to learn everything about what I did. Since I wasn’t worried about what people thought about me anymore, I took him with me to help me clean out my stuff from my previous house. I can only imagine how awkward it must have been for him. I was throwing things into trash bags and loading them into the back of my nephew’s truck and he was helping me while we talked about business. My ex wife was there as well making things all the more awkward.

I think people get caught up on trying to put on a front or make things seem better than they are when trying to do deals. I think you gain a lot of trust when you can just be genuine and honest with people. When they can see who you really are, it is so much easier to build trust on both sides and every deal should be built on trust.

Sean told me his story and it was amazing. He had gotten his start in the HVAC industry by going to tech school and he had gotten a job selling HVAC door to door in Canada. I can’t think of a sales job that is harder than selling HVAC door to door in the snow in Canada. After Canada outlawed door to door sales, he moved to Texas with a business partner,

Jamal and started selling water treatment there. He found it to be an easier sale than HVAC. They later would move to Los Angeles during Covid. They had a hilarious story about living in the equivalent of a motel 6 because it was right across the street from the only Gym in LA that was still open. Sean and Jamal each drove exotic cars. One was a Lamborghini and the other was a Ferrari. They came home from door knocking one day and their hotel room was raided because apparently it was a high drug use area and someone had reported them because they were living there in that cheap hotel with those cars.

When looking for someone to work with, character matters a lot. Sean told me the story while we were cleaning out my stuff and we were both laughing about it but what he said next mattered to me a lot. Sean and Jamal are both black. It would have been very easy for him to blame the police department for the raid and say that they were racist and claim that’s why they got raided. If I was in his position, I may have thought that. I even brought it up and said “That sounds so racist man. Two black buys in a bad area with money, oh yeah, gotta search them, they gotta be selling drugs.” Sean laughed and said, Tom, if I was a cop and saw someone driving a Ferrari and living in a 60 dollar a night hotel, I would be suspicious too.

Sean didn’t take the easy way out of anything. He has an internal locus of control and makes things happen. He doesn’t blame other people for his problems and he stays cool when things get heated. Its easy to get furious if you get raided. It takes a pretty strong person to brush it off, laugh about it, and go back to making money the next day.

These things plus the fact that Sean flew out to my house without a return ticket, just to learn about the trades, I was really getting impressed with this guy. He talked about wanting to partner with someone with a service, repair and retrofit company so he could build their sales more and also, he would have a better chance of selling to a private equity firm because he would have a more diversified company at that point.

I pointed him to my partner in Southern California. Brody Pennell was down there and I had a handshake agreement with him that anything I found that came up in Southern California, I would give him the first crack at it. He wasn’t interested. He didn’t see how it made sense and he was worried about private equity firms not wanting a door knocking company. When it comes to acquisitions, you have to see what other people don’t. In this case, I saw gold.

My company in Central California is called Lee’s Air. It’s a C-Corp and C-Corps have a lot of drawbacks but being able to distribute common shares and different classes of shares is one of its upsides. I knew that the whole reason that Sean wanted to do this was to be able to sell his company. He was on track for 5 million dollars of EBITDA for the year and that

was a big deal to me. I offered him a pure stock deal. We agreed on the terms and conditions and sent it in to the attorneys. In the deal, Lee’s would issue new stock to give to Sean and Jamal, which would dilute my shares in the company. CEG would then become a wholly owned subsidiary of Lee’s.

When it came to the valuation of the company, we looked at how much EBITDA Lee’s was going to do and how much CEG was going to do and diluted the other shareholders in Lee’s accordingly. I was the major shareholder but we did have several employees that had Class B shares as well.

Once the legal paperwork was completed, we were able to start the actual physical merger. We merged the ServiceTitan accounts together and got to work on the accounting merger as well. In these cases, where you are merging two larger companies, you need to appoint someone to be in charge of the merger. They act like a quarterback, passing to all the necessary parties such as the accountants, the asset managers to get truck wrapped, etc.

As soon as it happened though, the company took off. Sean sent a team to Fresno and another to Vegas to knock doors and have our plumbing teams do the installs in those areas. The results were outstanding. Sean and Jamal had been staffing up and getting people ready to knock doors as soon as we were ready. They went from 550K a week in revenue in August 2024 when we completed the paperwork to 1.3 million a week in revenue in November. I was shocked.

Its only been a few months since the merger. I am excited to see what lays in store moving forward. We intended on them having 5 million in EBITDA but they may hit 15 next year. This is one of the best deals I have ever done. I see how both sides win in this and I can’t be happier about that. When Lee’s sells, it will be a windfall for both parties.