SBA Deal Structuring to Manage Risk in a Cyclical Industry

And you know, it was early in his academic career but is now an absolutely prolific writer and you know, winner of Yale's teaching award is he's an amazing teacher. You know, it's pretty common in business school. There are some classes that get really popular and you know, you have to.

There's a system of bidding in most business schools of how you get in sort of like an auction. I was really lucky like because he had just started, you could still get into his classes. My understanding now is they are basically chock a block, you can't get into them.

And day one, AJ walks through a really simple LBO model for a classic traditional search and what an outcome could look like. You know, and he put all the caveats around it, right? Nothing is guaranteed.

There are downsides, there are upsides, but you know, sort of this is a cocktail napkin version of what a traditional search looks like. That was very cool. That was like nothing else I had ever seen before. And so you sort of fast forward through the second year of business school and I've got a choice.

What did you like about it, Andrew? The financial possibilities or the running an organization or what?

It was the combination, right? It was the be a CEO on day one with a high risk but you know, high reward path to a great financial outcome. You know, I think one of the things that AJ really impressed on you, on me was would you rather be, let's say, you know, you're 30 years old when you start out.

Would you rather be 35 and have failed but you tried well, you know, five years into a search or would you rather be the SVP pushed out of your corporate career at 55? Which one's riskier and you know, certainly a. A professional hazard in corporate America is getting, you know, pretty far up the totem pole and getting.

Yes, ahead has to roll for whatever reason. And you know, being able to look back and say that you control your own destiny, that was, that was really appealing to me. Just, you know, having seen it, it was like, yeah, that, that seems very credible.

Is, you know, the company man thing doesn't. Doesn't necessarily work anymore. Well, that.

I feel like you had an insight there or AJ had an insight that is counterintuitive to most people where being the captain of your own ship, owning a business is actually feels less risky than the corporate path. I think most people consider the corporate path the less risky option. But as we.

A theme that comes up here time and again is if you consider yourself a business of one and your employer is your customer, you have 100% customer concentration. A single decision can collapse your revenue to zero and then you're without a business. Yes. And, and in fact, also counterintuitively, this will.