I fired an established employee for gross ineffectiveness.

He spent his going-away lunch thanking me from the heart.

I was shocked– it makes me emotional to think about 5 years later. 🥲

What happened?

Some thoughts on departures with dignity:
🧵👇 It was my 1st acquisition, and it only took a couple months to realize that this employee was in over his head.

The primary function of his role was to compose deliverables for our clients.

But he wrote at an 8th-grade level.

All of his work had to be re-done by colleagues.

“I’ll hire a GM to take on ops while I build the HoldCo.”

This is the most underrated challenge in SMB.

It’s an 18-mo process, on a tightrope, with your biz in the balance -maybe the hardest challenge you face.

I’m no expert, but I have done it once. Here are my learnings:🧵👇 Background:

I had been the full-time operator of my first acquisition and the time was right to have someone else run it while I found / bought the next company.

Problem was, nobody in the business had the skillset to take on a President-level of ownership and accountability.

In 90 days I racked up $63k in diligence costs buying an SMB.

Here’s a weekly timeline of each $ incurred.

Broken deal costs are real. If you’re self-funded these are coming out of your savings.

Thankfully in my case I closed the deal!

A 🧵 to help you budget for your search: Please note:

I am listing when costs were INCURRED, not paid. This does not reflect cash flow.

I’m rounding as needed.

This was a blessedly UNcontentious DD process. Simple and happy = cheap.

The most complicating element was SBA lender in the mix.

I write a lot of threads about #SMBTwit topics like search funds, SBA-funded acquisitions, and operations.

Here is a live list of my threads to date: My introduction / background:

https://twitter.com/AZ_SMB/status/1634181818982469634

Here’s why I paid my lawyers $250k for one deal but $35k on another (identically-sized) deal.

It gets to some of the key differences between the Search Fund model and the self-funded model.

It’s a thread, but here’s the upshot: $250k bought insurance, and $35k gave me cash.🧵👇 Deal #1 was a traditional Search Fund deal, so my search and the acquisition were being funded with outside investor equity.

These were established investors who have done tons of deals. My investor group was 💯 – full of A+ operators and mentor-minded folks.

After lurking on SMBTwit, I’d like to introduce myself: “Turncoat Search Fund Guy”

I did a traditional search fund in 2017, bought in 2018, sold in 2022

2 mo ago, I turned my back on the SF model, signed a PG, and bought an SMB

7 BIG diffs btw “Search CEO” and “SMB Owner” 🧵👇 Some background: I did a local (AZ) search w/ traditional search investors in 2017 post-GSB.

Local focus was a hard sell to investors, but I’m passionate about my home state & knew there was plenty of opportunity

Found a prof. services biz via cold call. Closed early 2018.