Did an SBA deal.

Closed, have been running the company for almost a year.

When you’re levered at a###-###-#### dscr (yup… that’s what the dscr is on a 4x deal) and have a personal guarantee on the loan, the stress is incredible. For whatever reason, search has been glamorized. Here are some issues I’ve encountered:

1. Employees will harass you and take advantage of you as you’re a new owner. They know you need them initially, so they will demand raises or threaten to quit to join a competitor.

2. When a seller sells; he/she sells. Most likely, they do not care about your seller note if they’ve had the business for many years. They are not as incentivized as you would think to help you. They want to enjoy their life now if they’re retiring. Some may be bitter due to a forced sale (no one to take over, divorce, health issue, etc.)

3. SBA loans are fixed, not floating. Rise in rates ate my cash flow.

4. You’re not going to operate the business as well as the seller. Thus, you’re going to incur costs and do mistakes the seller wouldn’t have had.. Lawsuits, unemployment claims, capex

5. Vendors will harass you/take advantage as a new owner. Poor quality products, threats to increase prices to interrupt your business, threats to not pay you on time, etc.

6. Fighting the IRS. All of those seller add backs are going to be your responsibility to explain to the irs now! Hopefully you didn’t do the same. Don’t forget meals are only 50 percent deductible this year

7. working capital. Oh boy…. Looks like you’re not saving anything this year because of all the new hires; capex, inventory investment you made to stay competitive in your industry.

8. Employee turnover - the worst. Don’t need to explain how hard it is to find good employees.

Would I have done it all over again? No. They’re easier ways to make money. I’m quite lucky to still be running this. I make a good amount and I’m ok; but I would have any day taken a lower paying post mba job with less stress in retrospect. Searchfunder member