Introduction
Today we’re diving into how Joseph Ziolkowski found and purchased two businesses at well below market value on BizBuySell. After building a 130-unit real estate portfolio, Joe pivoted to business acquisition and found incredible opportunities most searchers overlook. His strategies for finding undervalued businesses on BizBuySell resulted in buying a restoration business for just 1.5x SDE and a manufacturing business with $800,000 in SDE for just under 2x. His approaches to deal sourcing, due diligence, and negotiation provide valuable lessons for any aspiring business buyer.
Founder Success Story QnA
Joe how did you decide to Pivot from Real Estate into small business ownership?
Yeah so I I guess I’ll kind of just start um earlier you know yeah even since from high school I always kind of had an entrepreneurial Spirit um well a lot of my friends you know got jobs just at regular retail or or you know restaurants um I post ads on Craigslist like handyman you know odd jobs and I’d charge 20 25 bucks an hour so I did that for the Summers uh throughout high school and getting to college. We’d literally spent you know three years of college just in consuming as much real estate information as we could and when we both graduated um we and got jobs we started uh buying together and we grew we brought in another partner grew up to um 130 units so we started in 2020 um by 2022 at 130 rental units and um even at that point though in a good month we would each bring home maybe 5,000 a month in in cash flow.
Stop let me stop you there so yeah you guys were cash flowing $5,000 a month each correct and how much how much were you working to manage those 130 units
Yeah so it it wasn’t a whole lot um we had thirdparty property management at that point um but that was also kind of hurting our cash flow um we’d cycled through a couple of those and it wasn’t the the rates they were charging but the maintenance so they all had in-house maintenance Crews so they were kind of incentivized to you know fix every little thing possible and um it just didn’t really align so we eventually brought it in-house um hired our own guy to to to manage our units and um that’s worked out a lot better so we maybe spend 10 hours a week now Max um on that but so yeah and that was probably the most we’d ever spent I would say because I have heard this many times that it’s shocking uh that a portfolio of over a hundred doors can yield so little cash flow.
So when I look at the time you did you guys built that in two-ish years yeah 130 units you’re not working that hard and it is Cash flowing uh I’m surprised and you were so young I’m surprised that you were disillusioned by this you guys really were impatient
No offense well I think I think a part of it was to the the market changing so even from 2020 to 2022 um that’s when interest rates started to climb back you know up in in 2022 and um deals just became a lot harder to come by um we initially started by mailing you know a bunch of letters direct direct mail letters to homeowners and and whatnot and we had good success with that but even a couple years down the road um it became a lot harder um cash flows a lot tighter you know when you’re paying double in in interest rates now um it just made it kind of so so you weren’t going to be able to rinse and rep it was going to get exactly and another thing too um side note in 2020 and 21 our lenders would um and I don’t know if all lenders allow this but we had a good relationship with them where say we’d buy a duplex for 100,000 and um we knew what appraised for 120 well we would offer the seller the 100,000 that they wanted bumped the price up 20,000 so technically a $120,000 offer but then we’d get a 20,000 credit at closing to cover our down payment and closing costs um and that became that kind of went away when interest rates went up too so just kind of some of the strategies we use to preserve Capital um when scaling were kind of gone so it was kind of interesting.
You had this technique where you could buy property without any money down which is how you got to 130 units in two-ish years
Yeah and you know that’s not going to work in every Market um we’re in Central Wisconsin where you know we were buying two units three unit properties for 75 to 100,000 um yeah that’s quite cheap right so it’s it’s not going to work say on the coastlines. In 22 I Pro we probably did like three or four flips saved up um about $100,000 from from doing those and use that to invest in the business but going back to your question it was kind of a natural pivot um just being in the field of real estate investing kind of in the entrepreneurial whatever on social media YouTube um you kind of see people like it was Cody Sanchez I think I kind of ran across first um Alex rosi some people like you know people like that right you kind of pick up from and learn from so I don’t know who I think like I said in the pre call um Eric’s my real estate partner he introduced me to your podcast I believe and um kind of from there listened to as much as I could and and started the search on on bis byell in in 2022.
So it was like: ‘this real estate thing is going even though we’ve accumulated quite a portfolio cash flow wise it’s not that great it’s only going to get harder’ – what now?
Yeah yeah exactly and I always knew too like I I was never a good employee I felt like so I I kind of knew like Corporate America wasn’t for me so I never really was involved in Corporate America um I had a few jobs that lasted six months and I just like I I can’t do this and and anyway so yeah so it’s like I I need to buy business right I need I wanted to basically increase my earned income is what I called it to you know put that money to work in real estate in the S&P whatever it is and yeah decided buying a business looking at the multiples um it just seemed like it seemed like the right fit so yeah in 2022 started the search um pretty much primarily bis by cell and I I connected with different Brokers on there as well um that I would you know reach out to and and I was looking to move somewhere warm at the time so that I spent pretty much my whole life in the midwest mainly Wisconsin and um so I was looking everywhere you know uh Florida Texas um the Carolinas.
Joe what didn’t you like about that Mr Rooter opportunity just curious because one of my most popular guests has the Mr Rooter territory in Portland
One of the things I mean I I knew labor was always going to be a challenge for for Construction And Trades and whatnot and um one of the things that I came across with Mr Rooter Plumbing is um it’s hard to keep and retain good plumbers because a lot of the time they’re not doing um like real Plumbing work in a sense it’s mainly like cleanouts and and kind of quick residential jobs so it’s like it’s it’s harder to keep a good you know licensed plumber um and that was just kind of the one of the things that I I read up on whether it was true or not you know it’s kind of I guess scared me off to the idea and I wasn’t a licensed plumber so in that business too I would have had to have the seller you know keep kind of keep their their license on board which I saw as a risk there was no employees that were licensed plumbers so it just kind of yeah didn’t quite work out.
How much did you have Capital to Port toward this what could you afford What were your parameters?
Yeah I had probably about 100-120,000 saved up um and I was you know I was willing to put it all all to risk essentially um with our real estate investing we pretty much were cash broke every time a new property came up so I wasn’t too concerned about you know putting putting all my money down um maybe have a higher risk tolerance and some but I guess that was just me. I’m 28 now um that I was 25 then and and single uh engaged.
120,000 of your own cash to put into this Venture you’re 25 years old – what business size were you then targeting?
I was really looking you know probably up to the one and a half um you know million Mark um as a purchase price just 10% down SBA you know 10% seller carry just kind of the traditional deal structure and um so and I I I I put cash flow criteria um around 300,000 minimum you know after Debt Service I wanted to have at least 100-150,000 um you know in in SD so that was kind of kind of my main criteria and yeah just started the search on bis VI cell um probably like six months it took it went through you know 100-150 different Sims.
What exactly is the nature of the work in a restoration business?
Essentially it is um water fire mold damage um if you you property damage any of those reasonings we come in help uh remediate the the water dry it out get everything ready to be built back um whether it’s mold we’ll put up containment you know get all the mold out of there hepac get it cleaned up get it tested and then ready for you know reconstruction. The bread and butter of the industry is really um the water water damage um whether you have like a dishwasher leak or a water heater or sump pump whatever it is those are the highest paying jobs highest margin jobs so that’s really what you want to try to I guess go after in in restoration but um a part of the problem is is is um you know it’s not reoccurring Revenue right it it is Project based and at the end of the day when a homeowner has a water leak right and they have a pipe burst or something they don’t call a Restoration company they’re going to call a plumber nine times out of 10 if not more.
Tell us about the hotel job story and what it tells us about the industry
We got a big hotel job, the sprinklers went off so there’s a lot of water damage as well and um got the job we got there like three in the morning took probably four weeks to complete. What’s unique about restoration with the insurance um with the insurance work you the whole industry Works off one um software pretty much called exact imate so it’s like line items and it’s got certain pricing for each line item but um when you start the job you you don’t submit like an in or you know an estimate or anything like that to the carrier you just get in there you do the work you’re you’re recording everything you do throughout the whole process take pictures you have dry logs for you know moisture testing and and whatnot but then at the end of it you kind of tally it all up you get an exact toate invoice generated based on the work you’ve done and you submit that to the carrier. Well from there they review all your photos they review all your dialogues they really try to review everything you’ve done and if you had missed something or one of your technicians didn’t take pictures or record something properly even though you did the work the carriers not going to pay you for it. This being such a large job I didn’t really have uh well this was my first big job you could say so I wasn’t very experienced on on having my guys track things as well as they should have and we submitted our our invoice and it was 200 to $240,000 right around there like 230 to 240 and um a couple weeks later the insurance company comes back and they say look we can only pay you 158,000 cuz this is all that that we see.
Anything else about the restoration and Remediation business to say for other Searchers?
One thing that we talked about in the pre call that I think is very important in in the if you’re considering one of these businesses to know where your leads are coming from so to know where the majority of your calls are coming from right so whether it’s from plumbers whether it’s from Google or online services um lead sources or if it’s from insurance programs so you can be um your Restoration company can be a part of insurance program so the big one in Florida is called contractor connection and essentially your business has to be established for two years so your EIN has to be established for two years in order to be on the program so if you’re going to go look at a business in Florida restoration and they get most their jobs from contractor connection you need to be wary because if you go buy it as an asset sale and you have a new Ein you’re going to get kicked off the program so yeah that’s something to be really careful of.
So you hired an operations manager then had to let him go um but eventually somewhat stable?
So eventually probably like the five sixth month Mark kind of stabilized um the cash flow was starting to you know come in from past jobs so that that issue was relieved and um you know had a few larger jobs which helped kind of boost the bank account but um yeah ended up kind of stabilizing it trim some of the fat that I believe like just employees and and whatnot that corporate had been running it with and um just kind of had a good lean team that was willing to work work hard and and we got more great reviews so ended up kind of I don’t know if it was a life change or what but my fiance and I were kind of talking at the time and and um really she didn’t want to be down in Florida our family’s from Wisconsin so it uh kind of came to a point it’s like it makes sense to sell the business.
At what price did you sell it? At the same price or at a price appreciation?
I listed it for 1.2 million so so by your entry multiple was incredibly low and then when you have such a low when you buy for such a good price you can essentially turn around and resell it without even adding much value sounds like you did add value but you wouldn’t have necessarily even had to add much value because there was basically Equity baked in because you could just sell it for Market a market price of even conservative 2.5x-3x and yeah you know come close to doubling your money. Yeah absolutely and and I I think I really grasp that concept from Real Estate um the last flip that my partner and I did we this is a funny story so we working we’re following up this guy for probably a year and a half to buy his six units in the central Wisconsin area and um after a year and a half he said yeah I’m ready to sell so we had closed on a Friday for 250,000 um we knew these properties were worth way more we closed the following Friday to another buyer so we we sold it to someone else bought it for 250 sold it for 350 in one week.
You sold it for 1.1 and how much did you carry as a seller note?
I had to to make the SBA comfortable on such a short hold period I had to have a larger seller note on the cell side um to make his SBA lender comfortable and um I was fine with that um just because I knew I knew my fiance wanted to be back in Wisconsin so um we set it up on on a five year balloons 7% interest and um yeah just kind of more I guess passive income you could say just kind of similar to real estate so okay and so you sold it for 1.1 and how much did you carry as a seller note then did you say three 367 367 okay yeah so quite a large note yeah but you still so you s so 750 or 733 or whatever went into your pocket right and then you had to pay off my SBA loan yeah so I walked away um with about 200 yeah a little over 200-250 I would say with pulling the money out of the out of the operating accounts as well yeah so 250 in cash and a 367,000 seller note that you’re going to be receiving payments on for the next five years with the balloon.
What does search number two look like?
Search number two was um I at that time I had about a little over 300 in capital just stuff I did 50,000 saved up from from whatever and and had that 250 from selling the last business so I had 300 to work with so my my purchase price went up a little bit um and this time around so I felt like I bought a pretty small business we had 11 employees total um for my first one so this time around I wanted to buy something bigger with a little more structured to it more of um you know managers in place and and systems in place. I pretty much kept the same search criteria other than that – industry agnostic again. I did a little cold Outreach kind I got a mailing list of different businesses and and their email information and um I did that for a little bit but just didn’t have too much luck with it. Working with Brokers I think is really the way to go just in my opinion.
You found this wood product manufacturing company – can you tell us about it?
It just said like wood product manufacturing company and listed at 1.6 million 1.595 um and basically three sentences worth of information no photos no numbers except the price. For whatever reason I decided to reach out and um got back to me and signed an NDA looked at the SIM I’m like holy wow this is a solid business. Right on the SIM so I thought that was great – they had financials right away going back to 2018. They were doing about 11 to 12 million in Revenue um basically every year and um just really staying consistent and even in 2020 it dipped down to 10.5 million and um they still turned a profit that year. The SD numbers averaged right around 800,000 for this business um every year besides the 2020 and 2021 I think it was like a couple hundred thousand those years um but all the other years were like 700,000-800,000. 2024 was actually 930,000 so a really good 2024.
First of all what is it manufacture what are these wood products that it produces?
We make one product um it’s wood veneer faces essentially so if you think of like a veneer door or like paneling that goes into building cabinets we literally just make the outer veneer face that then we sell to other manufacturing companies that make the final product door or the final product paneling. We get pretty customizable in terms of working with our customers if they need certain Dimensions we for their doors um you know we can make it to to exact specification and um there’s a lot to the industry but our kind of value proposition is being more customizable than than the competitors in the industry and and just being at a kind of a premium product with a higher price point.
Okay, so this is a manufacturing business that does 11 to 12 million in revenue and call it averaging around 800,000 of SDE?
Yep uh really consistent Revenue there was a CO dip but a minor one and it bounced right back yep uh it had been sitting and the sale price is is is you said one just under six just under six yep six so that’s call it 2X or just shy of 2x for a business doing $800,000 in SDE. I offered 1.35 which I mean I don’t for whatever reason I didn’t know if this was a competitive situation or not. I had a good conversation with the broker and um he said there weren’t any other offers on the table at the moment I’m like yeah there’s got to be this is too good to be true.
Okay so this is remarkable and so you reach out to the broker and he’s like yeah no no other interest and so already finding a business that the sale price with the seller wants is already Fair 2x yeah more than fair under Market let’s say you are feeling especially lucky and bold and you offered even under that you offered 1.35
Offered 1.35 um and I don’t know if I got that from to do that from from kind of the broker having a conversation with him I think like it just seemed the sellers were kind of just ready to sell they were you know in their 70s so just ready to retire at this point but and you knew it had been sitting so you knew that it wasn’t competitive so that was the only offer they were going to be looking at that week so that would give one some confidence yeah yeah exactly so yeah offered 1.35 they accepted um literally within I think a day or two and um we kind of had a little negotiation yeah had a little negotiation back and forth over the next um few weeks and the price actually went to to 1.4 million purchase price but the original listing um said it only included a million dollars in inventory and all the equipment that went involved um so it was going to be even though there was about 2.6 million of inventory that they had they were just going to try to liquidate the other 1.6 and include you know a million with the with the sale price um eventually kind of just like they they came back to me and they’re like look we don’t really want to deal with this inventory so we’ll just let’s bump the purchase price up 50,000 then we’ll include all 2.6 so I got an additional 1.6 million in inventory for 50,000 so I’m like yeah that’s no-brainer.
Okay uh well at least so far Joe so I was going to say okay so tell us about all the skeletons in the closet this underpriced business has
I mean one thing um that I was able to see before I closed on the business they had a small customer concentration um and right every deal a lot of your guest every deal is going to have some kind of hair on it there’s just really no way around it and I think this was the biggest kind of hurdle to overcome at least in my mind. Their biggest customer is doing at like 40% of our revenue and um which which is quite a bit and then we’re prob our top three or top four are doing 80% of our Revenue so quite quite a small customer concentration. Kind of had to get over that kind of fact um going into the purchase but after closing and now learning more about the whole industry well part of that fact is there’s so much consolidation um in this in this type of Industry where yeah we did have more customers at one point but now this one bought that one out and so on so there’s a little more concentration that way but there just really isn’t any other options per se.
Joe just double clicking on this weakness of the business this customer concentration it sounds like you don’t see an obvious way to ameliorate that
Exactly and and just for anyone that would want to go start a veneer face business it it’s pretty much at this point almost an impossible business to start at least I think just with the knowledge that you need of the actual wood and the veneer itself I really didn’t understand kind of going into it and um now that I’m learning more about it it’s it would be so difficult for someone to actually start a veneer face business and so I I I felt like there’s kind of a moat there as well yeah it’s also Capital intensive like you need to do it at scale you need expensive equipment um so you’re really not going to get Mom Pop shops really you know popping up.
You learned that about the business that it’s a weakness but it sounds like there were not other skeletons
Yeah I mean kind of going when you’re go it was tough um especially with like such a small it’s it’s generally A Small industry like the woodface veneer and when you’re going through due diligence it was um it was pretty difficult to try and like I guess learn more about the whole industry kind of the ins and outs. There really just isn’t you know anything online there isn’t other business owners talking about their wood veneer manufacturing business. What I kind of wanted to do to get as much knowledge as I could especially after closing was to keep the owner on for a little longer and um what she was completely comfortable with and I think we have like a six month or a year kind of um with six months like in person then year however however long I need for consultation.
For a manufacturing business that isn’t super sophisticated manufacturing – how difficult is it to learn? Do you feel like after a year you’ll kind of know it?
Yeah I’ll definitely I think after a year I would learn um kind of the general ends and outs of it but just with the variability of like wood itself um that’s kind of where the more the difficulty and experience comes in just over time um because a big part of of our of our bread and butter is um buying a certain class of veneer from the from the veneer Mill so it’s like say B-AB class it’s kind of graded throughout the industry like double A, A, B and so forth um a big part of our business is is kind of buying you know AB type quality wood at you a certain price sorting through it and then finding double A quality in it and so he’s like you know explaining this to me and um I’m like oh so it’s like Arbitrage he’s like what’s that and I’m like yeah well you’re buying this Veneer at 12 cents a foot and since you’re sorting it and finding the good stuff now it’s worth 36 Cents a square foot.
Just to make sure I got the numbers right so you bought it for um you offered 135 and then that went up another to 1.4 you said
Yep went to 1.4 and and then so and then what was the structure 10-10-80 correct 10% your cash 10% seller note 80% SBA loan and how much are you paying yourself so I’m just paying myself 60,000 a year. Oh um I mean pretty much how you arrive at that number because I recall from your real estate days that’s exactly what your real estate was paying you and you weren’t happy with that number well because that’s I mean right now that’s kind of what my you know the real estate pays me as well um so that adding to this this 60,000 plus my my um fiance she’s graduating she’s going to be an optometrist so starting up in June so that’ll be a you know pretty decent income as well um so I just I I feel like I don’t need more my goal is just going to be to pay down the SBA loan I I I my goal is to pay it off in three years um so that’s kind of putting everything back into the business.
Joseph Ziolkowski Business Stats
Joseph Ziolkowski has built an impressive track record in business acquisition, particularly in identifying undervalued opportunities that others miss. His approach to finding undervalued businesses on BizBuySell has produced remarkable results with two successful acquisitions in quick succession. Below are the key metrics of his business journey:
- Started business acquisition at age 25 after building a 130-unit real estate portfolio
- First business: Restoration company purchased for $515K with $350-400K SDE (1.5x multiple)
- Held first business for 9 months before selling for $1.1M, netting $250K cash plus $367K seller note
- Second business: Woodland Face Veneer with $11-12M annual revenue and $800K SDE purchased for $1.4M (1.75x multiple)
- Structure of second acquisition: 10% cash, 10% seller note, 80% SBA loan
- Current business generates $900K backlog consistently week-over-week
| Business Metric | Restoration Company | Woodland Face Veneer |
|---|---|---|
| Purchase Price | $515,000 | $1,400,000 |
| Annual Revenue | $1.6-1.7M | $11-12M |
| SDE | $350-400K | $800K |
| Multiple | 1.5x | 1.75x |
| Hold Period | 9 months | Ongoing |
| Employees | 11 | 35 |
Joseph Ziolkowski Method
Joseph’s success in finding undervalued businesses stems from a systematic approach that challenges conventional wisdom about where to look for deals. His method for finding undervalued businesses on BizBuySell breaks from standard practice and has yielded two exceptional acquisitions. Here’s how he identifies hidden gems that others miss:
- Focus exclusively on older listings (over 30 days) that others ignore
- Target businesses with minimal detail that might be undervalued due to lack of competition
- Look for motivated sellers, particularly those ready to retire
- Verify business health through comprehensive SIM review before outreach
- Negotiate based on actual business value, not listing price
- Structure deals to maximize equity capture (e.g. getting $1.6M inventory for $50K)
Joseph Ziolkowski Tools
While Joseph doesn’t rely on specialized tools for deal sourcing, he leverages specific resources during due diligence and operations. His approach to finding undervalued businesses on BizBuySell centers more on strategy than tools, but he uses key systems to maintain business operations after acquisition:
- BizBuySell – Primary platform for sourcing deals, focusing specifically on older listings
- Exactimate – Insurance restoration software used in first business for claims processing
- Custom ERP system – Built by previous owner for Woodland Face Veneer tracking all inventory and receivables
- Regional bank relationships – Leveraged seller’s existing banking relationship for smoother SBA financing
Key Notes
Joseph’s journey offers valuable insights for anyone looking to replicate his success in business acquisition. These key takeaways highlight critical lessons from his experience with finding undervalued businesses on BizBuySell and executing successful acquisitions:
- Businesses with minimal listing details often represent the best opportunities due to lack of competition
- Seller motivation (like retirement) can create pricing opportunities far below market value
- Understanding lead sources is critical – don’t buy businesses with channel dependencies you can’t maintain
- Customer concentration can be industry-specific and not necessarily a dealbreaker
- Moving past superficial deal metrics to understand true industry dynamics is essential
- Post-acquisition seller consultation is invaluable, especially in niche industries
Get Started in Just 5 Steps
You don’t need special connections or massive capital to find undervalued businesses like Joseph did. Here’s how to start your journey toward discovering hidden gems on BizBuySell using the proven approach for finding undervalued businesses on BizBuySell:
- Set aside preconceptions about ‘fresh listings’ and focus specifically on businesses listed over 30 days ago
- Don’t be deterred by minimal listing details – these often signal motivated sellers and less competition
- Research potential sellers before contacting them to understand their motivation and situation
- Structure offers based on verified business value rather than asking price
- Negotiate for favorable terms including inventory, equipment, and seller consultation period
Conclusion
Joseph Ziolkowski’s story demonstrates that exceptional business acquisition opportunities exist for those willing to look beyond conventional wisdom. His success in finding undervalued businesses on BizBuySell proves that hidden gems are available to diligent searchers who understand where to look and how to structure deals. By focusing on older listings, understanding seller motivations, and being willing to dig into businesses with minimal details, you can identify opportunities that others miss. The key takeaway isn’t that every search will yield 1.5x multiple deals, but that the most valuable opportunities often hide in plain sight – on pages 3, 4, and 5 of search results where most buyers never look.