Most buyers have to commit to an acquisition before they really know the business.

Diligence helps. But reading about a company is not the same as running it.

‍Today's guest got to do the second one first.

Jeff Thompson left a corporate career at Honeywell to become general manager of Charter Elevator, a ten-year-old elevator servicing company with just under 30 employees that was not operating profitably.

The owners wanted to hire a GM to turn the business around.

But Jeff wanted to own it.

‍So they worked out a hire-to-acquire structure. For six months, Jeff would be the salaried GM with nothing at risk but his time. After that, he could buy a third of the business at a pre-agreed price, and he'd have up to three years to buy the remaining two-thirds, half at that same price and half at a pre-agreed multiple.

If that's hard to follow, listen for Jeff's "one, one, three" way of explaining it.

Also listen for why the incentives worked for both sides. And for what Jeff did in place of due diligence: nothing. He was running the place.

In August, Jeff closed on the remaining two-thirds with an SBA loan. He now owns a sizable elevator servicing business, in an industry private equity loves.

‍You've heard on Acquiring Minds many times that a turnaround is not for rookies. Well, Jeff is the third guest in two months to defy that advice. Listen to our episodes with Mike Bourgeois and Elias Youssef for the other two.

But the takeaway from this episode is not to memorize Jeff's structure. It's to open your mind to the possibilities when you think about how an acquisition can be structured.

Here is Jeff Thompson, owner of Charter Elevator.