Built to Sell Radio

Luke Peters started his entrepreneurial journey reselling everyday appliances like bar fridges online. Over time, he built his own brand and transitioned to selling through major e-commerce retailers. By 2022, Luke had grown NewAir into a business generating $80 million in annual revenue before selling it for a life-changing exit.

In this episode of Built to Sell Radio, Luke shares key insights, including:

• How to apply his “10% Rule” to drive growth and efficiency.
• Strategies to de-risk your business and make it attractive to acquirers.
• How to identify and avoid acquirers who aren’t serious or financially capable.
• The critical question every buyer will ask—and how to answer it effectively.

Luke’s journey is a masterclass in transforming a small start-up into a valuable, scalable business.

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Episode Notes: Built to Sell Radio with Luke Peters

Host: John Warrillow
Episode Topic: From Bootstrap to $80 Million – Scaling NewAir and Preparing for a Successful Exit

Listen Now: Tune in to this insightful episode of Built to Sell Radio to learn how Luke Peters turned NewAir into a household name and a success story for entrepreneurs everywhere!

Key Highlights:

Founding NewAir: The Bootstrap Journey

• Luke Peters launched NewAir in 2001, starting from his garage with his wife and nephew.
• Inspired by his brother’s success in e-commerce, he tapped into SEO and targeted niche HVAC products like portable air conditioners and thermostats.
• Early sales involved reselling Granger products online, which later evolved into importing branded products under NewAir.

Building a Brand

• Transitioned from reselling to developing NewAir-branded products.
• Focused on underrepresented product niches like beer fridges and portable appliances, avoiding direct competition with giants like Whirlpool.
• Leveraged SEO tools like Google Trends and SEMrush to identify trending product niches.

Scaling Challenges

• Grew from a garage operation to over seven warehouse moves, managing logistics for up to five containers daily.
• Pivoted from 100% direct-to-consumer to a predominantly B2B model, partnering with big-box retailers like Home Depot, Lowe’s, and Amazon.

Financial and Operational Mastery

• Bootstrapped growth with cash flow and negotiated supplier terms.
• Invested in a proprietary ERP system to streamline operations and scale efficiently.
• Maintained profitability despite industry challenges by focusing on product differentiation and operational efficiency.

Exit Preparation

• Key improvements before selling:
  • Built a top-tier management team.
  • Transitioned to NetSuite ERP for better financial oversight.
  • Increased EBITDA margins to over 10% to signal brand value to investors.
• Partnered with Intrepid, a leading M&A firm, to facilitate the sale, targeting both strategic acquirers and private equity firms.
• Negotiated favorable working capital adjustments and structured a deal with 80% upfront payment and 20% equity rollover.

Reflections on Selling NewAir

• Emotional highs: Growing the company during the sale process.
• Emotional lows: Negotiating working capital adjustments and ensuring the deal structure aligned with expectations.
• Decision to sell was influenced by personal goals, market timing, and advice from trusted advisors.

Key Takeaways for Entrepreneurs:

1. Focus on Niche Products: Competing in overlooked product categories can help you avoid direct competition with industry giants.
2. Build Systems Early: Efficient systems and financial transparency are critical for scaling and attracting buyers.
3. Team Investment: Hiring top talent pays off in both growth and eventual exit opportunities.
4. Exit Strategy Matters: Preparing for a sale involves more than profitability—it requires strategic planning, risk mitigation, and investor alignment.
5. Advisors Are Key: Surround yourself with experienced advisors to navigate the complexities of scaling and selling a business.

Where to Find Luke Peters:

• LinkedIn: Luke Peters
• YouTube Channel: Strategy by Luke