$1B in apartments. 325 employees in multifamily, metal plating, and water COs. Ex-Microsoft. Buying unsexy businesses and improving w/ software. HBJ 40 under 40
Houston, TX
Joined December 2009
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I was a program manager at Microsoft. Good job, good money, nothing wrong with it. I quit in 2013 to start a software company and then ultimately build Disrupt Equity to buy apartments.
First deal was 99 units in Atlanta. It was a rough deal and complete reposition.
Nine years later: $1B in multifamily acquisitions, and a property management company running the day-to-day with 150+ employees.
Then started thinking about what else we could improve with systems and software, and give our investors strong cash-flow opportunities.
So we bought a chrome plating shop. 175 people, industrial metal finishing, the kind of business nobody at Microsoft has ever thought about for one second. Three years in and it's been the hardest thing I've done. Not the manufacturing. The people.
Then a water controls company. Now we're 45 days from closing a construction company that builds water and sewage treatment plants for Texas cities, the second company in the roll-up.
325 employees across three industries that have nothing to do with each other, and I'm the software guy in the room in all of them.
That's what I'll be posting about.
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When people hear I came from software and bought a plating shop, the first thing they say is "you must be digitizing everything."
Not really. My contrarian take: the software person should touch the software last.
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So the order I'd tell any software person buying an old-line business: learn how it actually runs, earn some trust, then change it in small pieces. The tech comes after that, not before.
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Freddie Mac's 30-year average is 7.18%. Third straight weekly drop. A year ago it was 6.22%.
Buyers and operators: are you underwriting lower rates at exit, or assuming this is just where we live now?
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Hobby is getting a nearly $500M, seven-gate expansion with Southwest, plus a new baggage system and a covered walkway.
Houston, be honest: Hobby or IAH when you get to choose?
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Houston rent is down 2.5% or up 0.1% this fall. Depends which report you read.
Concessions and renewals explain most of the gap.
Owners and PMs, which number matches what you're seeing on the ground?
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Houston has a little over 11,500 apartment units under construction. Peak was 40,126 in early 2023. That's 70%+ off the top.
The supply wave is draining. Who's actually building into 2028 right now?
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Texas water question for people in the space.
Small towns need plant upgrades and the state is funding a lot of it.
Is contractor capacity the real bottleneck now, or is it still the money?
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Houston Press picked Post Market as Houston's best food hall. Ceviche, West African bowls, Uzbek plov, dim sum, hot chicken, all under one roof downtown, plus Skylawn upstairs. What's the one stall you'd send a visitor to first?
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Houston absorbed 11,929 apartment units over the past 12 months. 13,847 more were still under construction at the end of Q3.
Demand is real and the pipeline is still deep. Houston operators: are you feeling lease-ups nearby, or has it eased?
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Most small deals need one thing to get done at a fair price: a reason the seller wants out now.
Ian Reynolds of Thesis Capital Partners, a fellow Houstonian, spent time on this with us on M&A Launchpad.
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On the capital side for deals under $100M, he under-levers and over-equitizes, and uses banks, SBICs, and BDCs.
Then he lines up the seller with notes, rollover equity, and earnouts, typically 25% to 30% of the purchase price.
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Ian's episode: ma-launchpad.podbean.com/e/w…
Buyers and sellers: what was the actual catalyst that got a deal moving for you?
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New M&A Launchpad episode: Megan McGee spent nearly four years trying to buy a business before she did.
She raised $500,000 from 13 investors and contacted more than 7,500 businesses. Here's what stood out to me.
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She's also looking at AI for efficiency and the customer experience, plus geographic expansion and tuck-in acquisitions.
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Full conversation with Megan and Casey: ma-launchpad.podbean.com/e/f…
If you've tried to buy a business: how many deals did you walk from before the right one?
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