Dan Burnside thought he was getting a great deal. The HVAC business he bought generated a claimed $800,000 of seller’s discretionary earnings, and he paid $2.1 million — under a 3x multiple, in a hot category, at a size built for an SBA loan.
He closed on a Friday. The next morning — before he had even announced the sale to the team — he started finding questionable activity. It was a harbinger.
What surfaced over the following months, according to his account on Acquiring Minds: work performed without the required license. Under-the-table bonuses to employees that never made the books. Key people who were toxic but couldn’t be fired. The worst summer for HVAC in 25 years. Employees leaving to compete with him.
The shop sat in a small rural town — the kind of tertiary market searchers chase because the deals are less competitive. Burnside was the outsider, and the town treated him like one. Less competition for the deal, more idiosyncrasy in the ownership. Diligence that, too.
Despite what host Will Smith called heroic efforts to salvage it, the weight of all of it overwhelmed the business. Burnside shut Parker Mechanical down and filed for personal bankruptcy. He told Smith what that is like, too.
Under 3x. $800,000 of SDE. Bankruptcy. The lesson isn’t the multiple — it’s that the earnings were stapled to practices that couldn’t survive a sober owner, and the debt didn’t care.