No One in Your Deal Is Paid to Tell You That You Can’t Run It

Everyone in your deal gets paid when it closes.

The broker works for the seller. The lender earns on funding. The attorney is paid for documents that are correct, and they will be correct. The CPA is paid for numbers that are accurate, and they might be. Not one of those people is being paid to look at you and say, you have never managed anyone, and this business has fourteen employees.

So that part goes unsaid, and the buyer finds out alone, around month three.

What the bank checks

When I was buying a home services business, the lender’s first position was that either my husband or I needed to be a technician. Hands-on experience in the trade.

Licensing had nothing to do with it. That state did not require a license to own a home services business, the way some states do for HVAC. This was the bank’s own preference: being a technician mattered more to them than having run a company.

Neither of us had it. What I had was decades of running operations inside businesses that size. They were satisfied with that and moved ahead.

Same bank, two theories of what a buyer needs, inside one conversation. First the person who can do the work, then the person who can run the place.

Both have something to them. In a one-van shop, the person doing the work is the revenue. At eleven technicians, the owner’s job is management, and a buyer who can swing a wrench tends to swing the wrench instead.

What stays with me is what neither version tested. Trade experience fits on a form. Years, employer, references. Management ability does not fit on a form, so it is not what gets checked.

What one technician was worth

The owner told me plainly what the business was. Not the name, not the phone number, not the twenty years of history. It was the technicians out in the field.

Put a number on that and it gets uncomfortable. Losing one technician took a minimum of $50,000 in annual revenue out the door with them. An experienced one, closer to $175,000.

And replacing them is not a hiring problem you solve in a month. Skilled technicians are in short supply, and the companies that have them know it. The good ones get poached by competitors who are happy to pay for someone already trained.

So the bank’s question was whether I knew how to turn a wrench. The exposure was eleven people who already knew how, each one free to leave, each one taking a piece of the revenue with them.

What the numbers do and do not say

Across 919,729 SBA 7(a) loans approved between 2010 and 2026, about 4% have been charged off. Charge-offs arrive late, with a median around 50 months, so the seasoned years tell you more: 2016 at 6.1%, 2017 at 6.7%, 2018 at 6.8%. Roughly one in fifteen.

A charge-off is the bank’s realized loss. It does not count the owner who stopped paying themselves for two years, the one who put personal savings back in, or the one who sold at a loss to get out from under the note.

One number does not exist. No one publishes how many SBA-financed acquisitions fail, or whether the buyer still owns the business in year three. The startup survival rates people quote describe new businesses, which is a different thing from a 20-year-old company that changed hands.

What the staff experienced

You spent six months on this deal. They found out last week.

No one asked their opinion. Most of them learned about it after it was decided, and some learned it from a coworker first.

They liked the old owner. Sometimes they loved him. He came to the funeral. He floated a paycheck when someone’s car died. He knew which kid plays which sport. Twenty years of that is sitting in the room when you walk in, and you are the person who ended it.

That is the starting position. Not hostility exactly. Something closer to grief with a stranger standing in it.

How it tends to go

The first two weeks are quiet. People are polite and watching. New owners read this as acceptance. It is observation.

Then something gets tested. Someone asks for an exception nobody told you was standard. Someone takes a Friday the way they always have, without asking. How that one moment gets handled is repeated to everyone who was not there, and it sets what the rules are now.

Around 60 to 120 days, people leave. The ones who go first are usually the ones with options.

And one person’s opinion of the new owner travels faster than the new owner’s. Every crew has someone the others check with. It is rarely the person with the title.

The ones I look at first

When I look at a staff roster in a deal, a few names stand out before I know anything else about them.

Whoever tried to buy the business themselves. Anyone related to the seller. Anyone who was promised something verbally, because a seller’s promise walks out with the seller and lands on the buyer’s desk. Anyone paid under the market rate, since that produces turnover on your watch rather than the seller’s. And the one person who is the only one who can do a thing.

None of that is in the financials, and all of it is knowable before closing.

Four questions

When did you last hire someone. When did you last tell a person their work was not good enough, to their face, and follow up two weeks later. When did you last hold someone to a standard they did not want to meet. When did you last fire someone.

If the answer to all four is never, you are about to do all four, with your own money at stake, with people who did not choose you, inside a business you are still learning.

Plenty of people do it. It goes better when it is expected than when it arrives as news.

If you are a technician, you can do the work, so when someone quits you fill in. That is the fastest route to owning a job instead of a business. If you came from finance, you can model the business precisely, and the model will not tell you that your lead tech is interviewing somewhere else on Thursday.

The deal you are looking at has a staff roster. Somebody on it has already decided what they are going to do when you take over.