Why Treat an Acquisition Like a Startup

hange management is one of the delicate dances that acquisition entrepreneurs perform when they take ownership of a business.

The conventional wisdom is that too many changes too fast can overwhelm the team and processes you inherited, leading to resistance, attrition, unintended consequences.

Well today's guest took a different approach.

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To me the most striking feature of today's story is the comfort that Sean Daly feels making changes fast and forcefully.

Sean has been around the block a time or two, so he's simply more confident in his own leadership.

But he also brings a spirit of experimentation and iteration from his years in Startupland.

Yes, mistakes will be made — goes the philosophy — but we will absorb them, adapt, and move faster toward the improvements that do work.

Now this is nothing new; you'll hear me cite the Zuckerbergism "move fast and break things." But it is quite rare in our world of acquisition entrepreneurship, where a light touch, at least early in a transition, is the prescribed approach.

One other thing to call out.

Sean exited a previous startup, so he had resources and was able to buy his HVAC business with all cash.

Which means there is no SBA loan burdening his cash flow.

So this is really more of a growth equity approach, versus the leveraged buyout model so common in our world.

With an LBO model there is a big debt payment to make every month, and you naturally worry about making it. But that may make you more conservative. Your first priority is paying down the debt, not growth.

With no debt payment looming over the business, growth moves to the front of the line.

Now the flip side, is that for a Sean to get a good return on his equity — and a return appropriate to the high risk of this investment — he needs to grow.

For the SBA loan buyer, as long as they don't screw up the business and it keeps performing as it did historically, it will be a very good investment.

Now all of this is going to be moot for most listeners, who have no choice but to use debt to acquire their business. But it is a contrast worth paying attention to.

And you will sense the difference in today's interview with Sean Daly, owner of Ice-C-Cool Mechanical of Coral Springs, Florida. Here he is.