Why SaaS Founders Are Buying Brick & Mortar Businesses
As AI reshapes the SaaS landscape, successful founders are looking offline—to high-margin, service-based businesses with strong cash flow.
As AI continues to commoditize software, many wealthy SaaS founders are asking a smart question: What else can I own that isn't at risk of being automated overnight? The answer is Main Street. Or more precisely—boring, beautiful, brick & mortar businesses generating between $2M and $20M in revenue.
These aren't your local dry cleaners. They're high-margin, service-based businesses with recurring revenue, loyal customers, and strong cash flow. Think HVAC service companies, niche commercial cleaning firms, specialized logistics providers, or regional landscaping businesses. In other words: operations AI can’t easily replace.
In this article, we'll explore why this shift is happening, what types of businesses are worth buying, and how to navigate the noise around SMB acquisitions.
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The Quiet Hedge: Diversifying Out of SaaS
While the tech world chases the next AI tool or vertical SaaS platform, savvy founders are diversifying into industries where automation and disruption aren't immediate threats. The businesses they're buying don’t live in the cloud—they live on Main Street.
Why Brick & Mortar?
1. AI-Proof and Recession-Resilient
Plumbing, HVAC, pest control, logistics, and janitorial services all require local expertise, in-person labor, and strong customer relationships. They’re difficult to outsource and nearly impossible to automate at scale. Unlike many SaaS plays, these businesses aren’t going away—they're just waiting to be modernized.
2. Real Cash Flow, Not Just Growth
SaaS companies are often valued based on ARR and future potential. But service businesses generate real EBITDA, often from day one. That’s a big draw for founders who’ve already taken one swing at a high-growth, high-risk company and now want steady returns.
3. Operational Leverage
What these businesses often lack—systems, digital marketing, software automation—is exactly what SaaS founders excel at. By layering tech onto analog businesses, these buyers can unlock major value and growth.
The Myth of “Easy” Business Buying
Scroll through YouTube or TikTok, and you’ll see influencers promising “how to buy a business with no money down” or “flip a car wash to $1M/year in 90 days.” While entertaining, these narratives rarely reflect reality.
Common Myths:
"Anyone can do it" – This isn't true—successful acquisitions require businesses with clean financials, predictable revenue, and stable employees.
"You don't need capital" – While SBA loans are available, successful deals demand significant liquidity, comfort with risk, and long-term commitment.
"Post-acquisition is the easy part" – Managing a 40-person HVAC company requires entirely different skills than running a 10-person SaaS startup.
As a founder, you might be thinking, "Why not just start a business instead of buying one?" However, we disagree. From our perspective, buying often beats starting a business when comparing risk-adjusted returns.
What Kind of Business Should You Actually Buy?
At Breakwater M&A, we specialize in helping entrepreneurs acquire high-margin, service-based businesses with:
$2M–$20M in revenue
$500K–$3M in EBITDA
Recurring or contract-based income
Strong local brand equity
Industries to Watch:
Home Services: HVAC, plumbing, roofing, pest control (selling one? read this.)
Commercial Cleaning & Janitorial: Often recession-proof with long-term B2B contracts
Health and Wellness: Health related services like Skincare Clinics and Medical Spas can offer high-margin, recurring revenue.
Specialty B2B Services: Niche players in compliance, safety, or facility management
These types of companies are often owned by aging founders looking to retire and open to structured exits with the right buyer.
Need more inspiration? Check out this Power Ranking of 25 Digital-First Businesses for Entrepreneurs—many of the same principles apply to service-based offline businesses.
Key Things SaaS Founders Should Know Before Acquiring
1. Good Deals Aren’t on Craigslist
Quality businesses with clean books don’t last long on public marketplaces. You’ll need proactive sourcing, thoughtful outreach, and a trusted M&A advisor to help surface proprietary deals.
2. Due Diligence Is Non-Negotiable
Due diligence may not be common among tech investors, but this casual approach won't work when buying Main Street businesses.
Forget the napkin math. You’ll need to dig into customer concentration risks, employee dependencies, margin trends, and seller transition risk. Unlike niche SaaS businesses, many Main Street deals are owner-operated, which means you'll need a solid recruiting strategy to find qualified operators.
If you’re eyeing a business with $500K+ EBITDA, this guide can help you understand how to properly value and position it.
3. You Need a Deal Team
Success requires more than just analyzing spreadsheets and conducting seller calls. It's about building a durable operation for the long term. You'll need experienced corporate M&A lawyers and advisors to coordinate the entire process. Here's how to find the right M&A advisor.
4. Post-Close Is Where You Win
The playbook doesn’t end at acquisition—it starts there. From implementing CRMs to optimizing paid ads, your job is to professionalize and grow what was once founder-run. That’s where the toolkit of an experienced SaaS operator can really shine.
Example: What a $5M Revenue Business Looks Like
Let's say you acquire a $5M landscaping company generating $1M in EBITDA. The owner is retiring, the team is stable, and the business has no digital presence. With minimal investment, you could:
Launch and optimize Google Ads and SEO campaigns
Implement route optimization software and CRM automation
Secure commercial contracts with recurring revenue
Add complementary services like snow removal and pest control
This is how you transform a "boring" business into a cash-flow powerhouse. Here's a deeper dive into selling a $5M business—and what makes it valuable.
Why Work with Breakwater M&A?
We specialize in acquisitions and exits between $2M–$20M in revenue—especially in the service sector. Our aligned-incentive model means we win when you do, and we know how to navigate the nuances of buying and selling in this range.
Whether you're a first-time buyer or a seasoned entrepreneur diversifying out of tech, we offer strategic guidance across every stage of the M&A process—from deal sourcing and diligence to negotiations and close.
Want to get early access to new deals? Join our buyer list HERE.
Final Thoughts
If you're a successful SaaS founder with capital and curiosity, it might be time to look beyond the cloud. Brick & mortar service businesses represent a unique opportunity to hedge against AI disruption, generate real cash flow, and apply your strengths in new ways.
Ignore the hype. Get the right help. And focus on acquiring businesses that are simple, profitable, and defensible—not sexy, scalable, or speculative.
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