Today's guest thought he was getting a great deal. The HVAC business that Dan Burnside bought generated $800,000 of SDE and Dan acquired it for only 2.1 million. That's under a 3x multiple for a business in a hot category with a hefty amount of earnings for an SBA acquisition.
Acquiring Minds
Buying Then Losing a $2.1m HVAC Business
Excerpts · 550 segments · ~1:53:01 long
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Well, all was not what it seemed with the company. Dan closed on a Friday and the very next day, Saturday, before he's even formally announced the news to the team, he uncovers some questionable activity, a harbinger of the disappointment to come among the challenges Dan dealt the business doing work. For which it was not licensed under.
The table unaccounted for bonuses to employees, key people who were toxic but couldn't be fired, the worst summer for HVAC in 25 years and employees leaving to compete with him. And in the background to all of this was trying to establish himself in an insular community. The business was located in a small rural town, a place where the new guy is seen as an outsider.
So if you're someone drawn to so called tertiary markets to buy a business because you perceive them as being less competitive for searchers, listen closely to Dan's experience. It may be true that very small markets are less competitive, but they could also come with their own set of idiosyncrasies.
So don't forget to diligence that ultimately, despite Dan's heroic efforts to salvage a terrible situation, the confluence of all these challenges overwhelmed his ownership of the business and he shut it down and filed for personal bankruptcy. He shares what that's like with us. Too, and we thank him for it.
Here he is, Dan Burnside, former owner of Parker Mechanical Webinars Today Thursday, SBA loan broker Heather Anderson returns for a lender Office Hours on add ons and carve Outs Banks take a different approach. When underwriting a loan for an add. On or a tuck in. This is something you need to understand if you're considering buying additional businesses to grow inorganically.
Banks also analyze loans differently for any business that does not have its own tax return, aka a carve out. So today, Thursday, April 30, Heather will explain how lenders assess both of these acquisitions. Special Cases Add Ons and Carve Outs the webinar is Add Ons and Carve Outs how to Get Banks on Board.
It is today, Thursday, April 30, noon Eastern. Link to register is right at the top of this episode's show. Notes or on the Acquiring Minds homepage.
AcquiringMinds co. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it.
If you ask owners in the ETA and search community, which insurance broker provides highest quality work, great outcomes and has a practice dedicated to searchers and acquisition entrepreneurs, one name comes up again and again. Oberle.
Oberle Risk Strategies has worked with hundreds of searchers over nearly a decade and is in fact led by a two time successful searcher, August Felker, which makes Oberle a specialty insurance brokerage for searchers by a former searcher. And if you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. An easy, no risk way…
To know August and the team at. Oberle to take advantage. Check out oberly-risk.com that's o b e r l e-risk.com link in the notes.
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