Greg Geronemus Bought smarTours for $29M and Exited to PE for $67.5M Four Years Later

The Setup Greg Geronemus grew up watching his father run a cosmetic dermatology practice in NYC, went to Harvard, did PE at Goldman, then returned to HBS where he co-built the first Entrepreneurship Through Acquisition course with Rick Ruback. He was 26 when he closed on smarTours in 2013. smarTours was a New York City group tour operator founded in 1996 by an Israeli solo entrepreneur. At acquisition it did $30M of revenue, $5M of EBITDA, and ran on seven employees. The founder touched everything. Key-person risk was the central story of the business, and also the reason the deal was available. The Deal The lead came from a BDO networking event in Manhattan, not from a mass-email campaign. The seller's accountant sketched the first structure: 5x EBITDA with 60% seller paper. Greg let them anchor, negotiated the seller note down, and closed at roughly $29M. Capital stack: - $10M equity from search investors - $5M SBIC senior debt - $14.5M seller note at 4% (50% of purchase price) The heavy seller note made the math work. Tour operators collect customer payments months before paying suppliers, so the business threw off cash that could service debt aggressively. First 100 Days Year one was almost entirely about getting the founder out and building a team that could run without him. Greg brought in his partner David plus a handful of early hires. They did not chase growth. They documented processes the founder had carried in his head, preserved supplier and B2B2C relationships (universities, religious groups), and protected margin. Operating Moves - Replaced paper-based back office with real software in year two. - Leaned into direct mail. The customer base skewed older and direct mail outperformed digital spend, counter to what a 26-year-old would instinctively do. - Built B2B2C channels through universities and affinity groups to diversify off pure retail. - Absorbed a run of external shocks: Ebola hitting South Africa itineraries (20% of revenue), Zika, European terrorism, Russia-Ukraine disruption to river cruises. None were hedged. They just kept shipping tours. - Used the working-capital dynamic to hammer down debt from $19.5M to roughly $4M over four years. Operating Lessons - Let the seller anchor. The accountant's sketch set a fair frame and prevented Greg from lowballing a founder who had optionality. - Price key-person risk honestly. 5x for a seven-person business run by one guy was not cheap on paper, but it was fair once you modeled what could go wrong in year one. - De-risking is value creation. Most of the equity return came from removing founder dependency and paying down debt, not from growth heroics or a J-curve bet. - Working capital is a weapon in prepaid-deposit businesses. If customers pay before suppliers do, debt paydown funds itself. - Match the channel to the customer, not to your age. Direct mail beat digital because the buyer was 65, not 30. - Show up in person. The deal came from a room, not an inbox.