AmiSight 8/17: Buying a Business Is the Easy Part

I liked this Fortune story because it cuts through some of the hype around entrepreneurship through acquisition. Lucas Philips bought a small automotive-interiors manufacturer at 26 using SBA financing and a personal guarantee. He has since grown revenue from a little over $1 million to more than $3 million, largely through four bolt-on acquisitions. That sounds like the ETA success story everyone wants to hear. The less glamorous part is waking up at 4:30 a.m., managing a blue-collar workforce, reinvesting instead of taking money off the table, and knowing the debt is personally yours if things go sideways.

What struck me is that access to capital may be making it easier to buy a business, but it doesn't make anyone qualified to run one. Philips himself gets nervous when 22-year-olds tell him they want to follow his path. I think that's an important message for buyers—and lenders. A good business, reasonable leverage and an SBA guarantee don't replace operating maturity. The real question isn't just whether someone can finance an acquisition. It's whether they understand what they're signing up for after the closing.

And one practical lesson from Philips: when you're negotiating your next bolt-on acquisition, take the Camry—not the convertible.

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