⏱️ Read Time: 4 minutes

Deal Analyzed: $3M industrial acquisition

Red Flags Avoided: 4

Knowledge Bombs: 3 PE firm secrets

Hey there Rebel,

Let's cut through the noise and talk about what really matters in deals and value creation.

THE REAL DEAL

The “Perfect” Engine Shop

An engine repair business looked perfect on paper. It had strong financials, reliable customers, and experienced staff. But when I asked more questions, I discovered lots of problems.

The owner had created a culture where employees couldn't make basic decisions without his approval. The facility was disorganized with poor record-keeping. A messy territory dispute with a former partner raised concerns. Most tellingly, the owner repeatedly sidelined me (the qualified buyer) to speak with my husband instead.

I passed on the deal. The next buyer wasn't so lucky - the seller opened a competing shop shortly after, violating his non compete agreement. The legal battle continues while the new owner struggles to right the ship.

Takeaway: Don’t be a chump thinking you’ll turnaround decay

DEAL DETECTIVE

What Private Equity Firms Actually Look For

Map Informal Power Structure

• Who actually runs the shop floor?

• Which technician do others quietly consult before starting complex jobs?

• Where do the real customer relationships live?

• In my last deal, office managers held all the power — rergardless of where leads came from: company or sales team.

Shadow Systems

You guessed right…the unofficial processes that keep things running.

• Is quality control actually happening, or does Rodney go by gut feel?

• Are the documented procedures followed, or does everyone use their "better way"?

Transfer Risk

Most critically, if the owner disappeared tomorrow, what would actually break? Most owners haven't built a business - they've built a job they can't escape. Not wanting to dig into profits to hire team members, they carry all the knowledge and sales.

VALUE VAULT

The Real Path to Premium

The key to business value isn't just efficiency - it's systematizing expertise. Private equity targets companies that excel at three things:

1. Converting individual expertise into teachable systems. Every expert has their unique methods, but this knowledge must be captured and standardized, even when experts resist sharing their "secrets."

2. Developing scalable judgment-based training that teaches not just technical skills, but decision-making. The best companies document how their top performers identify and solve problems.

3. Creating consistent, measurable service delivery processes. Success must be trackable and repeatable, with clear accountability and data collection throughout the process.

The challenge isn't just providing good service - it's making that excellence systematic and scalable.

Next week: The Dark Side of 100% Seller Financing - what sellers won't tell you about their "generous" terms.

Hit reply and tell me: what hidden value killers have you spotted in industrial deals?

Here's to protecting your downside,

kinza

p.s. Know someone evaluating an industrial deal? Forward this their way. The best protection is knowledge shared.

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