Buy a biz, figure it out later

We almost didn't buy it. Steven had to convince me that acquiring a business was even possible. One whiteboard session later, recurring revenue, fragmented market, licensing moat, life safety regulation, I was in. The security industry checked every box.

We only looked at one deal. Most searchers spend years finding nothing. We called one person, a former coworker who sold security businesses, described our buy box, and she said she had the exact fit. That was Alarm Masters. We issued an LOI without looking at anything else.

We skipped formal due diligence. The SBA did their part. We looked at the financials and RMR as best we could. But no quality of earnings report, no outside vendor. By the grace of God it worked out, but we wouldn't recommend it.

The legal process nearly killed the deal. We didn't use a transaction attorney. Neither did the sellers. Miscommunications piled up, the sellers thought we were going back on our word, and the deal almost fell apart over process failures, not the actual terms. Use an industry-specific attorney and set up a weekly touch point with the seller from day one.

We funded it with an SBA 7(a) loan. Standard structure for acquiring a small business. The SBA's debt service requirements were intense, but in hindsight it was nothing compared to the capital raises we've done since. (here’s one of my favorite SBA resources).