Tuesday, May 28, 2024

Energizers: Goldsboro couple building a thriving conglomerate

Those lucky enough to be on a luxury yacht sailing the Carolina coast might be served by stewards Melissa Mertely, 28, and Tyler Brennan, 29. That would be Dr. Mertely, owner of the Kinston Smiles dental clinic, and Capt. Brennan, an Air Force Academy graduate and experienced F-15 fighter pilot.

They occasionally perform hospitality duty as owners of Carolina Yacht Charters, while juggling their day jobs in dentistry and the U.S. Air Force. But that’s just a part of their frenetic daily mix, which involves three other businesses that employ more than 100 people and posted revenue of more than $21 million last year.

The high school sweethearts were newlyweds in 2020 when they made their first business acquisition, a floundering South Carolina golf course. They bought it with profits from a business previously built from scratch, Orlando, Florida–based Race Day Quads. 

Seven years ago, Brennan was selling drone supplies out of the back of his 2015 Jeep Grand Cherokee, financed with his life savings of $10,000 from lawn mowing and car washing gigs. On a busy day, he’d ship 10 or 15 packages of drone supplies. That was the start of Race Day Quads, an online store selling parts to professional and amateur drone racers in an underserved industry. The business now ships nearly 500 packages per day. 

“I was probably one of the top drone racers in the world at that time (2016), and there was a cry in the racing community that we needed a good store,” Brennan says. “It’s a high-volume, thin-margin industry and not something Amazon can do because there’s a huge customer support [aspect]. The retailers were owned by business people who didn’t know how to stock the right items or support them in the right way.” 

Four years later, the business had annual revenue of $18 million.

“When Race Day Quads peaked in 2020, we were able to start taking a profit, and, instead of paying taxes, our overall strategy is to acquire other businesses,” says Brennan. 

They started by looking at golf courses and settled on The Club at Brookstone, an 18-hole golf course near Anderson, South Carolina, and 20 minutes from Clemson University. They paid $850,000 and expected to invest $250,000 more. That ballooned to about $700,000 for improved greens, additional staff, better equipment and other costs. The turnaround took a couple of years, not several months as they had expected.

“After becoming the largest drone-racing distributor in 2020, I was very confident in what I could do,” Brennan says. “When we saw this golf course, not in great shape but in a great location, with poor management and no TLC put into it, I said, ‘We’re going to do XYZ and this place is going to be jamming.’”

Their timing proved savvy with increasing demand to get outside amid the pandemic. Brookstone is now profitable and reported revenue of $1.7 million in 2022, a 40% increase from a year earlier, the couple told Forbes last year. It’s among the most popular public courses in the Upstate, according to tee-time booker Golf Now.

All of this occurred as the couple established their careers. She earned her dental-surgery doctorate at the University of Maryland, then gained a residency at East Carolina University, which drew her to North Carolina. After completing her degree, she took over Lancaster Family Dentistry and changed its name to Kinston Smiles Family Dental when the former owner retired in December 2021. The Lenoir County business now employs nine people. She hopes to add a dentist this year and expand office hours.

In 2021, they diversified further by buying doggie day care businesses in Greenville and Wilmington. Last October, they bought a yacht with an intention of creating a charter business, which has quickly drawn a solid clientele.

“Tyler and I have always decided to take on a business based on pure personal interest — we are huge dog lovers that enjoy being on the water, playing golf, and making a difference in people’s lives,” she says.

They have learned that growing pains inevitably accompany entrepreneurial startups. “The golf course taught me that when you go to acquire a business, what they’re not [disclosing] is where you need to dig in,” Brennan says. “It’s about reading the information the broker sends you and then finding out what’s not there.”

The couple has never raised capital from friends, family or institutions. Instead, they have paid cash and relied heavily on seller financing. They’ve leveraged their Race Day Quads business to secure the later purchases and are paying interest rates of at least a couple of points below the mid-April prime lending rate of 8%. 

“Instead of making payments to a bank, we pay the seller,” he says. Their transaction terms range from five years with a balloon payment to as much as 15 years. Their plan is to have each of the businesses paid off by 2030.

Negotiating accelerated payments can optimize deals, Brennan notes. A year after buying the golf course, he asked the sellers if they would accept a $100,000 immediate payment in return for writing off $120,000 payable over several years. “They agreed and it was a win-win. That’s an example of how seller finance is something you can totally craft. You and the seller can make it whatever you want, so it’s always going to be better than a bank or Small Business Administration note.”

Brennan is getting all this done while working as a thrice-deployed fighter pilot based at Seymour Johnson Air Force Base in Goldsboro. As an academy graduate, he’s committed to serving through 2028, then will decide whether to re-enlist.

Surprisingly, he’s found that some of his most efficient work has occurred during off times while serving overseas. “When I was in the
Middle East and not focused on the deployment stuff, there was nothing else to do, so it ended up being a positive thing for us.” He says he dug deeper into the businesses while overseas, and he caught some employee theft in the process.

Managing from afar also requires hiring effective staff members who adhere to systems and processes that echo the discipline of military training. “Our GMs are paid above industry norm. We have a lot of trust in each of them, and we get very detail-oriented about the processes of each business, to an excruciating level of detail,” Brennan says. 

Within 90 days of buying a business, the couple learns each job themselves and defines, in a written manual, how they want each role performed. There’s a checklist for each task and employees are required to initial in ink as work is completed.

General managers compile the checklists weekly, including their workload and send the information to Brennan’s assistant, who reviews the reports and sends a one-paragraph summary to him. Each business is a separate entity, although all employees are covered under one health plan. A full-time accountant and managerial assistant handle the back-office administration.

Still, two professional careers, five businesses and daily life can be overwhelming, by any stretch. “We both hit a little bit of a breaking point in terms of workload and stress after I realized during my deployment that we were missing a lot of simple things,” he says. 

So they decided to automate or hire others for as many daily tasks as possible. 

“Now we have a full-time cook that works for us six days a week and an in-home assistant that does all the grocery shopping, pays all the bills, and does all the standard stuff, so we can focus on our jobs and the businesses,” Brennan says. That freed up about 20 hours
a week.

Their goal is to acquire more pet-care sites, though three previous offers have been topped by private-equity firms also excited about the industry. That’s a reality for entrepreneurs wanting to buy small businesses, he says.

“We’re facing the great retirement of the boomer generation, and often millennial and Gen Z children don’t want to run mom and dad’s company. So that’s creating really good opportunities for returns that aren’t found anywhere else in the market.”

They now seek to buy solid businesses that can be improved. “When there’s passion, there’s commitment, and we both provide very different perspectives in each business that has been essential in their growth,” Mertely says.  

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