Introduction
Discover how Sam Mahmood, co-founder of Pave, implemented a brilliant business acquisition strategy to purchase three paving companies in just 11 months. His portfolio now generates $66 million in revenue and $7 million in EBITDA. In this revealing interview, Sam shares his journey from medical devices to becoming a force in the paving industry through strategic acquisitions and building the right team.
Founder Success Story QnA
What were the early experiences, mentors or lessons that shaped your mindset as an operator and investor?
I think I’m a true sales and marketing guy at the intersection of paving today where I’m masquerading myself in private equity. I think I really realized that I can go and talk to interesting people and get them to want to work with me. And I said how can I go leverage that skill set to its highest ability? And when I first started my career in the medical device space, I learned I can go talk to very echelon individuals which are surgeons to want to work with my company when I started when I was the age of 25. Shortly thereafter, I said, you know, let’s go build something a lot bigger than just being a sales rep today. So I started manufacturing surgical instrumentation getting involved with large GPOS which is group purchasing organizations of hospitals and said how do I go continually go and expand my skill set by talking to larger key decision makers and then that’s what’s really influenced me to like start in this private equity world saying you know knowing how to go craft a story and a narrative and sell to individuals is an art of its own how do I go maximize that in the biggest opportunity and now I’ve landed that on paving thus far.
Can you tell us about your journey in medical instruments and how that led to what you’re doing now?
I started the business when I was 24 years old. I was before that I was an aspiring footballer. Played soccer my entire life. Realized I was not going to be Cristiano Ronaldo. Went to Sweden, played a little bit over there and had a couple injuries. Came back and I had a sports agent who told me, “Hey, I have a former rep who got in the medical space. You should go talk to him.” So I talked to him, got in the space and shortly I realized that this is an industry that has a lot of lucrative aspects to it and I figured out how to go start a distribution business out of that and later learn how to go manufacture medical devices. There’s a very quick understanding of learning how to go scale in an industry I didn’t have much experience in. So over the last 7-8 years built that company to like a national scale. I took some chips off the table about 2 years ago and still own that company today. It has operated completely without me and that’s where I had the inflection point to say like what can I go do now right I built one company as an operator for the last let’s say 8 to nine years how do I go and translate that into an industry that I feel has a lot of upside potentially fragmented and I can use my skill sets to the highest opportunity and I landed in the rollup space of paving.
What is the story behind choosing paving as your industry focus, and what tailwinds did you identify?
Yeah, it’s a really good question, right? I spent a hard knock MBA understanding where I really wanted to go pursue my endeavors and I look at it in a few different ways. The first thing I looked at was where things are a little bit unprecedented today and I wanted to see where’s an economic uplift and what I noticed in paving was that there was about $350 billion entering the market space from the $2 trillion that was being put in from the bipartisan act and I thought that was quite compelling. And then I saw all these baby boomers that had no succession plans as well. You hear that in a lot of different service industries, but paving specifically, when I look at this, I’m like, many guys in their early 30s are not entering the paving space whatsoever. And then lastly, I saw an influx of these self-driving cars entering the marketplace as well. And full self-driving is becoming very prevalent today in society. So, I said, how do I go combine a thesis around that? So that was the initial early tailwinds I saw in paving that other industries didn’t really complement as well. You know, you look at plumbing, you look at HVAC, they’re quite mature sectors now that have been established in the rollup sector. And then the other things I started to look at as well is where can I go use my skill sets? Like where can I go be a domain expert and have the highest leverage of what I’m really good at, right? And like I said earlier in this podcast is like I’m truly just a sales marketing relationships guy masquerading myself in private equity.
What were the first 10 hours of research like when you started considering paving?
I’ll tell you the first wild inflection point which really got me going around paving. I was actually sitting on my porch on like a Friday at 4:00 p.m. and I was reading Elon Musk’s biography by Walter Isaacson. And this book was quite fascinating, but there’s a really unique point in the book that just caught my attention where Elon was talking about a certain turn where the self-driving car was not performing. And I realized and he realized that it wasn’t the car itself, it was the line striping in the roads themselves that was causing the car not to perform. I was like interesting. So Elon was audacious enough to say go repave and reline stripe the roads and that happened and then shortly thereafter once that was done the car performed well and after that I realized I was like wow line striping and roads are going to be exponentially valuable for the future and that’s where all the diligence started happening. I put the book down right away, went on my computer, started understanding paving, what’s going on in the roads and infrastructure sector, what had been passed in 2022 by the Joe Biden administration and started forming a thesis around that. I shortly started calling all my network and saying hey who knows a paving owner who knows paving industries today and it’s more of a who not how approach, right? Oftentimes if you’re going to this thesis and you’re a search funder or an independent sponsor and you’re trying to figure out where you want to go indulge your skill sets in or an industry that you want to go dive two inches wide and 10 feet deep in, it’s always a who, right? Who can you go call rather than how you’re going to go do it.
How did you build your advisory board with such high-caliber people?
There’s a couple things I can control, and there’s a couple things that I cannot control, right? When I go about crafting an advisory board and creating a narrative out of this, I would say that there’s two things I can control, which is the people I bring on and the opportunity that I cultivate. And the outcome is something I cannot control today, right? But I know if I really focus on the controlled variables, the outcome should be quite promising. So, as I’m creating a narrative and I’m storytelling what I’m looking to go do by rolling up multiple paving companies getting to potentially 75 to $80 million of EBITDA and almost a billion dollars of revenue, that should gravitate caliber individuals to want to join the journey. So that’s the first thing like you’re telling them your story. Then it’s about them meeting you, your energy, how you actually craft your story, what’s your background, and what you’ve done thus far. And people can feel that from just a Zoom call or in-person meeting, right? When you can go put those things together, I think you can really go attract almost anyone, right? If you have the right opportunity and you have the contagious energy that people want, then I think like those are two things I just really focused on showing that I can go create something massive that’s worth their time.
How did you approach raising capital for your acquisitions?
A lot of people when they’re independent sponsor or starting out as a holding company, they have a pitch deck and a dream and I think Thomas Edison once said that vision without execution is just hallucination. And I learned that you want to go out there and create a MVP as fast as possible. You can talk about what you’re doing, but if you can’t go out there and get a couple million bucks from your friends and family, you really haven’t proven out your thesis. So I went out and raised retail capital to start. And for anyone that wants to go do this, raising retail capital is literally like knowing what people think of you when you die because you’re either going to show up to your funeral or not, right? And that was my first time really putting my hand out to retail investors, which is friends, families, doctors, attorneys, people in my network. And we were fortunate enough in the first 30 days to go raise about $2.5 million dollars, right? And that $2.5 million dollars was allowed us to go buy our first company. And then we started creating a lot of webinars, a lot of traction, and we had a lot of people just loving the thesis that we were doing. I started building the brand and building this in public as well via LinkedIn and just catching a lot of attention. Shortly thereafter, in about a 4-month period, we raised about almost $7 million thus far, all from retail investors.
How did you find and acquire your first paving company?
When you’re first getting going, you’re playing multiple different roles. You’re raising capital. You’re doing the M&A. You’re finding deals. It’s very hard. And I was fortunate enough to go find a company in Arizona called DNO Contractors that was doing around about $12 million of revenue and about $1.5 million or $1.6 million EBITDA. We structured a really unique deal in the sense that we bought the business for a little over $2 million to start with a heavy seller earnout assuring that the business will go hit $1.7 million the next year. So we bought the business for a total of $6.5 million of enterprise value. So $1.5 million seller carry, $2 million at close, and then a $3 million earnout, assuring that he hits $1.7 million of EBITDA over the next 24 months. So he has 24 months to go do that on a TTM basis. And we structured this deal for the mere fact that it always mitigates our downsides for our LPs and assuring that the owner is aligned and they stay on with us ensuring that they have skin in the game, right?
What were some of the surprises during your first acquisition?
I think people underestimate the business acquisition strategy. I think there’s a lot of guys on Twitter, LinkedIn, Instagram who talk about how easy this is. I’ve done some really hard things in my life and acquiring companies is definitely the hardest thing I’ve ever done in my entire life. So let me just put that as a notion. And if anyone tells you this is easy and you can do it as a W2 and buy a business, they probably haven’t bought a business. And just a couple surprises from the get-go that will just shock you, right? Just think about the bank accounts right from the get-go. Like how’s that managed? Does the owner still have access to the bank account or not, right? He was withdrawing some funds still post-acquisition and we were wondering why he was doing so because he thought he was owed some of the AR still. Little things like that that can catch you off guard because you’re doing 200 diligence items to make sure the business is operating correctly. And post acquisition, there’s just so many things that come into play. The employment agreements, you have to go do all these new employment agreements with everyone assuring that they’re aligned with the new entity. The LLC’s and the corporate structure as well, putting that under your umbrella.
How do you source deals for your acquisitions?
There’s a few ways you can go get deals today. Brokers are a great place to start. So you have to look how brokers are incentivized, right? They want to get deals done. So when you’re called to Pave and you’re only buying paving companies and you call a bunch of brokers and you have a really clear thesis on what you’re doing, they will be highly incentivized to go work for you. And I basically created a network of 15-20 brokers saying, “Hey, I’m Sam. I’m Pave. I only buy paving companies in the Southwest doing between $1 and $10 million EBITDA. I will pay you a handsome fee if you find us good company within our buy box. Do you want to help us?” And I got a lot of yeses, right? Again, the more narrow you are, the more deal flow you will get. When you have these wide holding companies that you buy everything under the sun, you’re not really in the forefront of anyone’s mind. So that’s why I really created a narrow thesis and the brokers were exponentially valuable for that.
What’s your approach to working with traditional business owners in a blue-collar industry?
If you’re trying to go enter the main street business today and you’re trying to raise capital simultaneously, you’re playing a role of understanding how to go talk to blue collar and white collar in the same day. And that is the art of this business. No owners will not want to jump on a podcast at all. Like even though I can go and have a Pave pod, it’s a way to go bait them to get an initial conversation, but ultimately what I do is I get them on the phone and that’s a way to initiate a conversation. And again, you can only get someone’s attention span in a very short period of time. You better be able to gravitate an owner’s willingness to talk to you in the first 30 seconds of a conversation. Today, all the paving owners that we work with, they know me as the guy going out there and buying a bunch of paving companies, but I just talk shop with these guys and they love it. I go down there, we joke around, we shoot the breeze. They love that. I don’t show up like a private equity guy in a vest and a Patagonia shirt at all. They don’t want that, right? I show up in boots, a t-shirt, and I talk the paving lingo, right?
How do you decide whether to keep or replace founders after acquisition?
A lot of these operators today when they’re ready to sell, they’re either in a place of they can’t grow their company anymore. They just don’t have the knowledge or expertise or they’re just ready to retire, one or the other. But ultimately, you have to give them your assessment of who they are as a person and knowing do they fit your culture and values as well if you want them part of your journey for the next 3 to 5 years. And we had gone both ways. So we had one owner that we’re parting ways with just because he’s not aligned with who Pave is and it’s totally fine. We have a new operator in place and then our Utah company is fully aligned and that company and that operator is going to be with us for the next 5 to 7 years or however long we will run Pave for. I think ultimately what you want to see is like what’s the life cycle of that individual and knowing does he have the right mindset to go double this company and keep the morale of this business.
Sam Mahmood Business Stats
Sam Mahmood’s Pave has achieved remarkable growth in just 11 months, acquiring three paving companies that generate substantial revenue and EBITDA. His strategic approach to business acquisition has created a portfolio with strong financial metrics and impressive growth potential.
- Acquired 3 paving companies in just 11 months
- Combined portfolio generates $66 million in annual revenue
- $7 million in EBITDA across the portfolio
- First acquisition: DNO Contractors in Arizona ($12M revenue, $1.6M EBITDA)
- Second acquisition: Utah company ($10M revenue, $2.2M EBITDA) with six coreys and asphalt plant
| Company | Revenue | EBITDA | Key Assets |
|---|---|---|---|
| DNO Contractors (Arizona) | $12M | $1.6M | Established client base |
| Utah Company | $10M | $2.2M | 6 coreys, asphalt plant |
| Third Company | $4.6M | $2.2M | Regional presence |
| Total Portfolio | $66M | $7M | Multi-state operations |
Sam Mahmood Method
Sam Mahmood’s business acquisition strategy focuses on creating a competitive advantage through specialization, relationship building, and operational improvements. His method has proven successful in the fragmented paving industry.
- Building a “Mount Rushmore” advisory board with industry experts who have generated nearly $1B in combined revenue
- Focusing on a narrow niche (paving companies) rather than diversifying across unrelated industries
- Creating unique deal sourcing methods including the “paid pod” strategy
- Structuring acquisitions with seller earnouts to align incentives
- Implementing sales processes and KPI tracking in acquired companies
Sam Mahmood Tools
Sam leverages various tools and platforms to execute his business acquisition strategy effectively. These tools help him source deals, build relationships, and manage his growing portfolio of companies.
- LinkedIn for personal branding and attracting talent/deal flow
- Podcast advertising to initiate conversations with potential acquisition targets
- Broker network of 15-20 specialized M&A intermediaries
- Term loans for non-dilutive capital to fund acquisitions after initial equity raises
- Strategic questioning technique to identify best-in-class operators through referrals
Key Notes
Sam Mahmood’s journey offers valuable insights for entrepreneurs looking to implement a successful business acquisition strategy. His approach combines industry focus, relationship building, and operational excellence to create value.
- Confidence is “two inches wide and 10 feet deep” – specialize deeply rather than broadly
- The first 90 days post-acquisition are critical for building trust with existing employees
- People are more important than systems when acquiring traditional businesses
- Capital is a commodity but the right partners are invaluable
- Always maintain your core values when evaluating investment opportunities
Get Started in Just 5 Steps
Want to replicate Sam Mahmood’s success with your own business acquisition strategy? Follow these five key steps to begin your journey toward building a portfolio of companies in your chosen industry.
- Identify a fragmented industry with tailwinds and low competitive barriers
- Build an advisory board of industry experts before making your first acquisition
- Raise initial capital from your network to prove your thesis
- Create a narrow focus and specialized brand to attract deal flow
- Structure deals with seller incentives to ensure smooth transitions and alignment
Conclusion
Sam Mahmood’s business acquisition strategy demonstrates the power of focus, relationship building, and strategic execution. By specializing in the paving industry and building the right team around him, he’s created significant value in just 11 months. His journey from medical devices to becoming a force in the paving industry offers valuable lessons for any entrepreneur looking to grow through acquisitions. The key takeaway: success in business acquisitions comes from deep specialization, building the right network, and maintaining your core values throughout the journey.