SBA Deal Structuring to Manage Risk in a Cyclical Industry - Acquiring Minds Recap

Podcast: Acquiring Minds

Published: 2026-02-05

Duration: 1 hr 44 min

Summary

Andrew Kersrock shares his journey of acquiring a ductwork fabrication business and details the importance of structuring deals to manage risk, especially in cyclical industries like construction.

What Happened

In this episode, Will Smith interviews Andrew Kersrock, who recounts his unique approach to acquiring a ductwork fabricator located an hour from his home in Northern Virginia. Frustrated with ineffective email outreach, Andrew decided to make a phone call, which ultimately led him to successfully leave a message for the owner, thanks in part to the owner's wife facilitating the connection. This unexpected turn of events resulted in Andrew acquiring a business with 22 employees, showcasing his determination and adaptability in the acquisition process.

The conversation shifts focus to the deal structure Andrew utilized, particularly emphasizing the cyclical nature of ductwork demand tied to the construction industry. Knowing that downturns were inevitable, Andrew strategically opted to utilize more of his own cash and less SBA debt, a decision that, while resulting in a lower rate of return, significantly mitigated risk. This approach highlights the importance of balancing equity and risk management, especially for those not optimizing strictly for internal rate of return (IRR). Andrew encourages potential buyers to consider the long-term benefits of bringing more equity into their acquisitions to avoid the pitfalls of over-leveraging.

Key Insights