How Shawn Allard Acquired Two Ice Cream Shops in Arizona for $1m+

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Today, we’re featuring Shawn Allard.

Shawn has a background in consulting and has also dabbled in entrepreneurship over the years, launching several ventures that had initial traction but ultimately didn’t pan out.

In 2023, Shawn decided to pivot to acquisition entrepreneurship with the purchase of Novel Ice Cream, a leading small-batch ice cream business with two shops in the Phoenix area.

Shawn’s story is impressive for a few reasons:

1. He ran a successful search in 6 months while maintaining a full time consulting job.

2. Due to high failure rates, food and beverage companies were not on Shawn’s initial hit list, but he kept an open mind and found a gem in the space with significant expansion potential.

3. At 26 years old, Shawn is one of the younger acquisition entrepreneurs I’ve met, but he’s super thoughtful about building a brand in the space and making this business his legacy.

We’ll break down exactly how he did it, including his sourcing process, deal structure, financing strategy, and more.

His Story

Shawn has lived in the Phoenix area for the last 20 years.

He graduated college in 2019 and got a job as a consultant in the dental industry, helping dental students get into private practice.

In 2021, he was itching to do something different and set out to build his own business. Over the next two years, he started several ventures, including a rental car company that he grew to a fleet of 30 cars.

While his startups gained some initial traction, they ultimately failed. He also discovered that the constant ups and downs of building something from 0 to 1 didn’t fit his personality.

At the beginning of 2023, he came across acquisition entrepreneurship on Twitter and was instantly hooked. He read everything he could find on the topic and started interacting with other searchers in the community.

“I launched my search in Feb of 2023 and over the next 3 months looked at everything within my search parameters. I built strong relationships with brokers and was on a first name basis with nearly 30 of them”.

One of these relationships got him initial access to the Novel deal before it was about to hit the market. Even though Shawn had been against food and beverage establishments, this business stood out for several reasons:

• High margins – 25% SDE margin, driven by volume and small footprint. Each shop was <500 square feet in size with no tables

• Loyal customer base and strong brand – 2k+ reviews on google with a 4.9 star rating and 80%+ repeat customer rate

• Strong growth – 30% annual revenue growth

• High quality, differentiated product – everything was made in-house and the core product (ice cream stuffed donuts) was highly differentiated in the local market

• Turnkey operations – highly efficient operating model from production to storage and distribution, with a solid management team in place

Shawn could see the possibility of Novel becoming a major regional brand in the space. Maybe even a national brand.

The deal never ended up going to market because Shawn decided to scoop it up, no pun intended 🙂.

Acquisition Process

One of the things that positioned Shawn for success and ultimately got him free and clear access to Novel was the effort he put into building good relationships with as many brokers as possible. “I would follow up constantly and ask them if they got something across their desk that day for me to review”.

• Timeline: 6 months – Shawn began his search in February 2023, signed an LOI with Novel in May, and closed in August. This is definitely on the faster side in the SMB acquisition world

• Deal Criteria

  • Industry Focus: agnostic, but initially excluding food/beverage

  • Purchase Price: Up to $1.5m, as Shawn’s personal investment was limited to $150k (assuming 90% debt funding) and he wasn’t interested in pursuing other investors

  • EBITDA: $250-350k

  • Location: US

• Sourcing Channels: marketplaces and brokers. The broker on the Novel deal was Bryan Vitagliano from SBBG

• Pipeline Stats: Shawn looked at 100s of deals. He submitted one other LOI, which was for a landscaping business that he was outbid on

• Service Providers: none, did it all himself or relied on family members with financial and legal expertise

The Business

• Name: Novel Ice Cream

• Location: Phoenix, AZ (one shop in Phoenix and other in Mesa)

• Industry: Food and Beverage

• Description: Contemporary ice cream shop serving small-batch handcrafted ice cream and ice cream stuffed donuts. 12 flavors in a cup, cone, float, or in their world-famous Dough Melt™

• Established: 2017

• FTE/Contractors: 23, including 2 managers and 2 shift leads

• Acquired Revenue (2023): $1.2m 

• Acquired SDE / EBITDA (2023): $275k

Deal Structure

Shawn’s deal structure was fairly straightforward – the entire purchase price paid upfront and 90% of it was financed using a SBA loan. “The only thing I wished I had done differently was explored alternate deal structures like a seller note or rollover equity, but I wanted to get the deal done quickly”.

In terms of the SBA loan, he approached a few lenders but ultimately chose to work with Evolve Bank & Trust. He learned that most SBA lenders were not keen to lend in the food and beverage sector, and when they did, they had strict criteria – Live Oak for example required a minimum of 8 retail locations.

Growth Strategy

Shawn is hyper focused on two growth pillars. One is adding more locations across Phoenix and ultimately Arizona. The other is continuing to build on the brand and making it an integral part of the local community.

• Unit Expansion – this is a very clear growth strategy in Novel’s case since the business has been operational for 7 years and operations/logistics have been optimized in the two current shops. Shawn plans to open 2-3 locations per year. He is currently in the process of opening one new retail location near Central Phoenix and also experimenting with an ice cream truck that would cater to events, weddings, sports venues, etc.. Given the small footprint, each retail location is relatively cheap to setup ($35-40k build out cost). He believes he can scale to 10 locations across Central Phoenix and more across Arizona eventually

• Brand Development – the business is well known in the community but Shawn feels there is a huge opportunity to propel the brand further by driving more engagement on social media and at different local events. “Based on the number of reviews we have and high repeat order rate, I knew the brand was well known across Phoenix but I’m still surprised everyday when I meet new customers who had never heard of us before”.

Exit Goals

It’s too early to tell but Shawn would like to grow the business to at least 10 locations before even considering an exit.

“I’m developing a strong emotional attachment to the business. I could also see this business being in my family for years to come and something that deepens our ties to the local community”.

Since Shawn doesn’t have external investors, he can take his time and doesn’t need to rush into an exit.

If anyone is interested in connecting with Shawn, let me know. He is happy to share more about his experience and offer guidance to anyone considering a similar path.