The 7-Year Collapse of an SBA Acquisition

I actually think this was professional services business because just like a law firm or an accounting firm, the talent leaves the building every day when it's closing time. Like the machines continue to run sometimes, but it was the people who made the machines run. And the second thing about that was that it was a relationship business.

It was not a transactional. We're going to buy this service or product from FNM Tool. They were buying from Mike who enabled it all.

The employees knew that and the customers knew that. And I thought this was something where they were buying from a collection of systems and processes that were FNM Tool but there were not systems and processes. It was Mike and team. And I totally miss that.

And how could you have diligence that better or how might you tell listeners to diligence that?

Get lunch with the seller and see how often their phone rings would that.

Would have uncovered it in this case?

I think so, yeah. I mean I remember the first couple of lunches and it was. We couldn't get through 10 minutes of conversation without something coming up.

Well, I've heard that tip multiple times before so it's actually reassuring to know that it would have in fact worked in this case. That, that, that would have told you what you needed to to know. The number one cause anecdotally that we see for self funded searches going sideways, going south is seller misrepresentation all the way to seller fraud. What was do you Think that there was some of…

I'm thinking about the right way to put it. I think fraud is probably too strong of a characterization. Was I set up for failure?

I don't have any proof of that. I just don't know. It just, it makes me wish I bought a bigger business with a real management team. And it made me realize that I, like I said, more of a vibes guy.

Now I wish I trusted my gut when I was walking around and I interacted with the seller, because I think had I done that, I wouldn't have gone through with the deal.