On this episode of Still Searching with Jed Morris, independent sponsor Andrew Engram of Lightning Rod Capital breaks down what it actually takes to buy lower middle market companies when you raise capital deal by deal.

Andrew's road runs from walking on to the Texas A&M football team to managing offshore drilling projects in Scotland, Rotterdam, and Korea, to getting laid off in the oil crash and rebuilding through an MBA, a stack of VC rejections, and a co-founded boutique investment bank. Then he left to build his own firm. His first deal as a sponsor was a natural gas measurement company in West Texas. He spent eight months on it, talked to over 400 capital providers, found exactly one family office willing to move, and then watched performance fall off a cliff. He walked away carrying the diligence bill and the lessons.

Those lessons are the meat of this one. Do not try to win a banked auction as an independent sponsor. Do not underwrite peak EBITDA and call it normal. Know who runs the company post close before you fall in love with the deal. And remember the line Jed gives every buyer: you have a buy box, but lenders have a lend box.

A buyer walks away with: how the independent sponsor model really works, how to pressure test a deal with a personal board of advisors before going to market, and why capital raising is won in person, not over Zoom.

Full transcript: https://jedbmorris.com/podcast/independent-sponsor-lessons-andrew-engram

Watch on YouTube: https://www.youtube.com/watch?v=yQ7giA19G_E

Connect with Andrew Engram: https://www.linkedin.com/in/andrewengram19/

On this episode of Still Searching with Jed Morris, Army veteran Renan Cortez explains how he bought an $8 million restoration business with 100% seller financing and zero money down, and what happened when it all came apart two years later.

The deal itself is a masterclass. An off-market find, a QoE before terms, and a negotiation at a diner where buyer and seller worked one calculator together until they landed on 7% over 12 years. No bank. No broker. A page and a half with ketchup stains that a lawyer turned into a 74-page APA.

Then the part the highlight reels skip. Revenue slid from six million to two, and it was not organic. A $600,000 MCA loan demanded 12 grand a week. Payroll came out of his own pocket until it could not. And at the lowest point of his life, a phone call from an old military buddy arrived at the right moment. Renan handed the business back for a dollar, went back to corporate, and started rebuilding. His verdict is not what you expect: the seller financing is not what failed him. The structure that saved him from the bank also gave the sellers a reason to want the business back.

A buyer walks away with: how to negotiate seller terms side by side instead of across the table, why 100% seller financing can tempt a seller to default you, the MCA trap to avoid, and the community rule that saves more than deals.

Full transcript: https://jedbmorris.com/podcast/8m-seller-financing-renan-cortez

Watch on YouTube: https://www.youtube.com/watch?v=29H-f9Yr58I

For Halloween, Still Searching with Jed Morris joins Andrew Hoffman of the Search Fund Coalition for Tales from the Search Crypt: six real stories of small business acquisitions that ended in the graveyard.

A $20 million healthcare deal that lost most of its EBITDA nine months after close. A 100% seller-financed plumbing buy that turned into a fight over $600,000 in receivables. A star salesman who turned out to be the most toxic person in the building, holding half the revenue hostage. A parts manufacturer that tripled capacity on cheap money right before the market normalized. A searcher so deal fatigued he hoped his own QoE would come back bad. And a seller who built a copycat business across town before the ink dried. Names changed, industries pivoted. The settlements and NDAs are exactly why you never hear these stories.

This is not scare content. It is preparation. Do not overlever, because a 1.5 DSCR feels comfortable and is not. Know the incentives of everyone on your deal team. And never close with a seller you do not trust. Jed ends where most people will not go: what insolvency does to the person holding the personal guarantee, and why losing money is not losing everything.

A buyer walks away with: the failure patterns that repeat across deals, the leverage and trust rules that keep you out of the graveyard, and the reminder that in year one your only job is to not fail.

Full transcript: https://jedbmorris.com/podcast/small-business-failure-stories-halloween

Watch on YouTube: https://www.youtube.com/watch?v=DIzF_b7xmGg