Introduction
Discover the fascinating journey of Brandon Adams, who went from military service to finance before acquiring Philadelphia Dry Ice Company, a 45-year-old ice distribution business. In this insightful interview, Brandon shares his experience of buying an ice business, the challenges of due diligence, and the reality of running a hands-on operation. If you’re interested in buying an ice business or any small business acquisition, Brandon’s story provides valuable lessons on entrepreneurship, leadership, and business transition.
Founder Success Story QnA
Can you share your background and what led you to buying an ice business?
I’m from the Philadelphia area, went to college here. September 11th happened my senior year of high school, so I was kind of always edging towards government service, military service. I ended up taking that route after college. I enlisted when I was a senior in college actually in the army, and I spent six years as a reconnaissance team leader there. After trying to consider making that a career, a good friend of mine who was working for a hedge fund at the time convinced me to give that a shot. The fund specialized in energy infrastructure like pipelines, refineries, storage terminals. I stayed there for 10 years. The fund when I started was 30 million dollars and at its peak in 2016 reached 12 billion. Around 2015, I had a really good friend from high school, Don Ware, whose father owned an automation parts distributor. Don came home to be president of those businesses, and we started meeting up regularly. I thought what he was doing sounded really cool – not sitting in front of a computer screen for 12 hours a day, solving different problem sets, managing people. I missed building strong relationships with people from the army, so we developed a thesis for buying a business and in early 2020, we both pulled the plug and dove in head first into our investment partnership called K4.
Why did you choose to buy a business rather than starting something from scratch?
That was the route we had settled on for a number of different reasons. First, we didn’t have any skill sets to build a product. Sure, you could make the argument maybe we had the skill set to go and build a service, but really it comes down to risk mitigation. Our thesis revolved around the fact that there are so many great long-standing businesses out there that are ripe for capital and right for people like us – younger, more enthusiastic folks to take over. Many businesses we found had reached a plateau where their owners were happy with what the business was providing them, but the business had the foundation to do much more. They’d either capped out on their ability to grow it or capped out on their ambition to do so. We thought there were a lot of opportunities for us to come in and pick up the torch where they left it.
How did you find the Philadelphia Dry Ice Company?
We were really old school at first. We were sending out letters, sending emails, making calls. Part of that was Don’s dad told us that if someone’s trying to get through to him and wants to stand out, he would recommend they come see him in person and tell him why they want to buy his business. So we did that quite a bit – we drove places, and if the owner wasn’t there, we’d drop off a letter for him. If he was, we’d try to talk to him. I started by Google mapping every industrial park within about an hour’s drive of where we live. I made an enormous list, trying to find out how large they were by triangulating based on number of employees, getting revenue numbers off of Manta (which I learned were incredibly off base), looking at what industry they were in, who owned them, checking the Pennsylvania Department of State website for business owners, trying to figure out who owned them, how old they were, if they had family working there. I made a list of close to 2,000 businesses, and then we got to work sending them emails, calling them. It was a terrible hit ratio – out of all those letters and emails, we probably heard back from maybe three or four business owners.
What were your search criteria when looking for a business to buy?
We started with a financial or EBITDA range of one to five million dollars, which at the time we thought was a fairly narrow window, but now I see is a fairly wide window in the micro market. The reason we picked that range was our impression that if you’re playing sub five million dollars, you’re generally not competing with many private equity firms (though COVID changed that). We also needed something large enough to support two salaries, since Don still runs one of the other businesses for his dad and works on the ice business two or three days a week. Operationally, we were looking for something generally within our skill set range – me with a background in infrastructure and Don’s experience mainly in light manufacturing. We tried to find businesses that generally fit that schema or one like the ice business that we found – one that’s just incredibly simple and straightforward that the likelihood of failure was fairly small.
What attracted you to the Philadelphia Dry Ice Company specifically?
What we liked about it was the simplicity. Very few SKUs, about 65 or 70 percent of revenue is based on dry ice sales, and then the other part is the logistics – managing the trucks, dispatching, delivering the ice, moving it from point A to point B. That’s maybe the more difficult part, but that’s what drove us to consider this. When we think about what we want to do long-term, we have this idea of wanting a long-term holding company where we assemble a portfolio of maybe five to ten businesses over the next 10 to 15 years, very similar to the Chenmark model. This seemed like a great opportunity where if nothing else, this is going to generate a lot of cash for us to go out and purchase other businesses down the line. There’s very little risk of us screwing up what’s already been established, and there’s a decent chance we could grow it a good amount.
What did the financials look like for the Philadelphia Dry Ice Company?
We bought it from a gentleman who had bought it from the original owners about four years prior. The original owners had established this company with their father back in 1975. They had gotten the business to the point where they were doing about 550 to 600 thousand dollars EBITDA. When the gentleman we bought the business from took over, he grew it quite a bit. The first year he owned it, he grew EBITDA to about 700,000, the second year he hit 825,000, the third year 850,000. Then during COVID, it was a phenomenal year – he did roughly 2.8 million in EBITDA that year, driven primarily by the fact that we were all staying home, ordering food online, having food delivered straight to our door. So the demand for direct-to-consumer food logistics skyrocketed, and thus the need for dry ice skyrocketed. But the seller understood that 2020 was an anomaly. He wasn’t looking for a multiple of 2.8 on the business. He was very upfront about that, saying he didn’t expect that, he didn’t even expect a multiple on a fraction of it. He said the business is what it is prior to 2020, 2020 was an anomaly.
What growth opportunities did you see in the business?
We didn’t bank on being able to grow the business all that much. In our models, we assumed GDP plus a percentage or two, a fairly small amount of growth. But we saw a lot of inefficiencies in the way things were being run – taking paper tickets, dispatching drivers in a really inefficient manner, just really small things here and there which would be great experience for us to come in and tackle. Where we see potential growth is looking upstream or downstream of what we’re doing. Upstream, if we look at really large dry ice distributors and manufacturers, they’re doing other industrial gases, welding supplies and equipment, anything that has to do with food logistics. When I look downstream, I think food logistics and healthcare logistics – are we supplying the logistics providers with any solutions for other bottlenecks they have other than this commodity that they include in their box? That’s where we’ve started to spend a little bit of time exploring.
What moats does this business have against competition?
The moat is really your relationship with the customer and the relationship with the supplier. Dry ice is scarce enough that you’re rolling in it if you’ve got the equipment to make it, and that equipment is extraordinarily expensive. Dry ice takes up a lot of space too if you want to sell it at scale. So does the wet ice. You have to have the space, you have to have the relationships, you have to have the capacity to move it around and know what you’re doing with it. If I had a decent amount of capital and could buy a few trucks and buy a decent space, sure I could start selling dry ice. But I think if you’re an upstart, you’re going to pay two or three times the amount of money that we pay for our ice, and you’re going to have to place it in areas that are going to be able to generate a margin off of that. The types of people that we sell to expect pretty cheap ice. The wet ice space is very saturated and very competitive, but the dry ice space is different – you need to be able to secure the ice to be able to do it.
What was the biggest surprise after acquiring the business?
That was definitely a failure of the due diligence process. Our due diligence focused a lot on making sure that they were earning the amount of money that they said they were going to earn. We were really focused on the financial side, just a derivation of our deal structure. We went 80 percent SBA with a 10-year amortization, 10 percent seller note, and 10 percent equity. Where we probably lost sight was what the owner was doing every day and how that was going to affect our lives once we owned the business. We did ask him what he did day to day, and he mentioned it was mostly logistics and HR and sales and communicating with suppliers and securing ice. But he was doing all that from the cab of his truck because he was also a full-time driver and delivery guy. We bought it right at the beginning of the busy season, so there was no time for sitting around the office and learning how things go. We just had to go. So we showed up day one, jumped in the truck, and off we went delivering ice all day. We showed up at 7:30 and stopped at 6.
How did you adjust to the 24/7 nature of the business?
This business operates 24/7, just like any home service business like a plumbing business. We have on-call hours, so we were getting calls at eight, nine, ten o’clock, three in the morning, and we had to figure out quickly how to manage that. The guys who started this business in ’75 would do everything themselves because they lived a block away. So if some nightclub called them at midnight for 10 bags of ice, they’d go do it. We had to quickly change that and manage customer expectations. After a couple of times having to leave the dinner table with my wife and my daughter to run downtown and deliver ice, I talked to my partner and said something’s definitely going to change, not just for me but for the other employees too. We set some minimums on that and put a lot of effort into changing customer behavior and setting their expectations appropriately. If they know ahead of time that their ice machine is going to go down, which they normally do, we tell them to send somebody down to pick it up, they’ll pay a cheaper price, or ask us to deliver it during the day.
How has your military background helped in running this business?
I love the leadership aspect. When Don and I started talking about going forward, he expressed to me that his goal was to step back and do more of the finance stuff and leave the operational HR stuff. He was viewing me as the finance guy, but I said I don’t want to do the finance stuff anymore, I really want to do the operational and HR stuff. You know, it’s tough when you inherit a team – technically they got fired from the last owner’s business and hired by our business at the same time, so not everybody was a great fit. But most of the folks here were nines or at least eights, with a couple tens sprinkled in there. A lot of these people live in the neighborhood right around South Philly, and it’s a very family-oriented environment. They can see through it really quickly. You come in and demonstrate a lot of empathy, you give people a lot of slack to operate with at first, just getting to know how they move about and what they’re all about, what their goals are, what their ambitions are. You tell them, look, I’m here to make sure that you have the right tools to execute the mission with my intent, and they appreciate that.
What are your future plans with K4 and the business portfolio strategy?
The whole objective for us is, in an end state, financial independence, and having different businesses operate in a symphony together is more diversified and represents a better form of risk mitigation for us longer term. That’s what we set out with. In our experience so far with this business, we’ve seen some opportunities just tangentially to what we’re doing with the ice business that fit more with staying focused on logistics generally. We’ve thought about with this five to ten business strategy, is it something where we want to have the ice business and a landscaping business and a light manufacturing business? Or what we’ve seen is we’re building up an expertise in this logistics and distribution business. One of the great opportunities we’ve come across is logistics real estate – just going from place to place, seeing and knowing where they’re building, why they’re building there, what they’re building there, how big it is, what assets do they have, what is it facilitating, where might you be able to do that better or with a smaller or bigger footprint. We’re starting to learn a lot about why this logistics machine operates the way it does and where it could potentially be better.
Brandon Adams Business Stats
Brandon Adams acquired the Philadelphia Dry Ice Company, a 45-year-old ice distributor that has shown consistent growth and profitability. The business experienced a significant boom during the pandemic but has maintained strong financial performance in normal conditions. Below are key statistics about this successful ice delivery business:
- Established in 1975 by South Philadelphia entrepreneurs
- Current monthly revenue: Approximately $850,000 EBITDA
- COVID-19 peak revenue: $2.8 million EBITDA in 2020
- Growth trajectory: Consistent annual growth from $550K to $850K EBITDA pre-COVID
- Business model: 65-70% dry ice sales, remainder logistics and delivery services
| Metric | Value |
|---|---|
| Business Founded | 1975 |
| Current EBITDA | $850,000/month |
| Peak EBITDA (2020) | $2,800,000 |
| Primary Revenue Source | Dry Ice Sales (65-70%) |
| Secondary Revenue | Logistics & Delivery |
| Acquisition Structure | 80% SBA, 10% Seller Note, 10% Equity |
Brandon Adams Method
Brandon’s approach to acquiring and running the Philadelphia Dry Ice Company combines systematic business analysis with hands-on operational involvement. His method focuses on thorough due diligence, understanding operational realities, and building strong relationships with both employees and customers.
- Systematic business identification through geographic mapping and research
- Direct, in-person outreach to business owners to stand out from competitors
- Thorough financial due diligence with focus on sustainable earnings
- Hands-on operational immersion by working alongside delivery staff
- Employee relationship building through demonstrating work ethic and understanding their roles
- Setting clear customer expectations to improve work-life balance
Brandon Adams Tools
Brandon utilizes various tools and resources to manage the ice delivery business effectively. While the ice distribution itself is a physical operation, Brandon leverages both traditional and modern business tools to streamline operations and support growth.
- Google Maps for geographic business identification and territory planning
- Manta for preliminary business research (though found to be inaccurate)
- Pennsylvania Department of State website for business ownership verification
- SBA financing for acquisition capital (80% of purchase structure)
- Broker networks for deal flow acquisition
- Twitter for networking and sharing entrepreneurial journey
Key Notes
Brandon’s journey of buying an ice business offers several important insights for aspiring entrepreneurs and business acquirers. His experience highlights both the opportunities and challenges of small business acquisition, particularly in niche industries.
- Due diligence should focus not just on financials but also on the owner’s day-to-day responsibilities
- Being willing to work alongside employees builds credibility and provides valuable operational insights
- Simple, cash-generating businesses can provide foundation for larger portfolio strategies
- Setting appropriate customer boundaries is essential for work-life balance in service businesses
- Military leadership skills translate well to civilian business management
- Business opportunities often emerge naturally once you’re operating in an industry
Get Started in Just 5 Steps
If you’re interested in following Brandon’s path and buying an ice business or another small business, these five steps can help you get started on your acquisition journey. Brandon’s experience shows that with the right approach, transitioning from employee to business owner is achievable.
- Define your acquisition criteria including geography, industry, financial parameters, and operational capabilities
- Build a comprehensive target list through research, mapping, and business databases
- Develop both direct outreach strategies and broker relationships to find opportunities
- Conduct thorough due diligence that examines both financials and operational realities
- Plan for adequate working capital and be prepared to be hands-on in the initial transition period
Conclusion
Brandon Adams’ journey of buying an ice business demonstrates the potential of business acquisition as a path to entrepreneurship. His transition from military service to finance to owning the Philadelphia Dry Ice Company highlights the importance of thorough due diligence, hands-on operational involvement, and strong leadership. The success story shows that even traditional, seemingly simple businesses can generate substantial cash flow and provide a foundation for broader entrepreneurial ambitions. For anyone considering buying an ice business or similar operation, Brandon’s experience offers valuable insights into both the challenges and rewards of small business ownership.