Podcast Summary: Acquiring Minds

Episode: Growing Profits 30% in the First 1.5 Years (March 5, 2026)

Host: Will Smith
Guest: Jonathan Taylor, Owner of AEK Technology

Episode Overview

This episode explores Jonathan Taylor's journey from a 15-year tech and operations career at powerhouse companies like Google and DoorDash into owning and scaling a Los Angeles-based aerospace distribution business, AEK Technology. Jonathan and Will Smith dive into the mechanics, risks, and rewards of acquisition entrepreneurship, focusing on how Jonathan achieved 40% revenue growth and 30% EBITDA growth in his first 18 months as owner, while also addressing key decisions: from over-equitizing his deal (raising more equity than needed) to mitigate risk, to his unconventional approach to searching for businesses part-time while still working a corporate job.

Main Discussion Points & Insights

1. Jonathan’s Path to Entrepreneurship

• Inspiration & Background

  • Jonathan grew up in a family of small business owners and always aspired to own a business but prioritized a stable career in finance and tech before pursuing acquisition entrepreneurship ([04:08]).
  • Exposure to entrepreneurship through friends and professors who ran search funds further influenced his decision ([04:08]).
  • The "now or never" motivation hit as he approached 40; a supportive wife, established family, and financial runway enabled the leap ([07:07]).

• "You Only Live Once" Risk Profile

  • “It just felt like now is the time to do it, and if I didn’t do it right now, it would be harder much later.” – Jonathan Taylor ([07:07])

2. Self-Funded, Part-Time Search Approach

• Challenging the Conventional Wisdom

  • Jonathan maintained his role at DoorDash during his search process, defying the belief that a successful self-funded search requires a full-time commitment ([09:13]).
  • Mentored by searchers who encouraged maintaining a high bar for deals by keeping his tech salary—a move that extended his runway and maintained objectivity ([09:22]).
  • "Every two weeks you're extending your runway." – Jonathan Taylor ([10:34])

• Evaluating Businesses With Rigor

  • His wife played a critical role as a ‘deal check,’ especially cautioning against businesses that wouldn’t justify leaving his tech salary ([11:52]).

3. Deal Structure: Over-Equitizing for Peace of Mind

• Capital Structure Decisions

  • Jonathan raised more equity and took a smaller ownership stake (60%) to reduce leverage and keep significant cash on hand ([20:44]).
  • Over-Equitization: Opted for 65% senior debt, 15% seller note, and ~15% equity—more conservative than standard self-funded models ([20:44]).
    • "I’m very, very happy I did not do that [maximize leverage] because... it would be much harder to sleep well at night." – Jonathan Taylor ([24:29])

• Investor Alignment and Ownership

  • He prioritized working with investors who brought strategic value, sometimes trading a higher equity stake for the right partnership and safer structure ([29:02]).
  • Never regretted sacrificing ownership for sustainability: “I have never thought, ‘Oh man, I wish I would have not done that and raised additional equity.’ It was the absolute right decision.” – Jonathan Taylor ([26:22])

• Investor Perspective

  • Will Smith highlights that a small reduction in founder equity meaningfully increases investor ownership and motivation ([26:49]):

    "By going from 90% to 80%, you’re effectively doubling your investors’ participation, while only taking yourself down 11%."

4. Business Selection, Acquisition, and Risks

• AEK Technology: The Target Business

  • Los Angeles-based, stocking distributor focused on aerospace, defense, and industrial end markets ([33:25]).
  • 22,000 SKUs, 3,000+ parts, authorized distributor for Hutchinson, a major defense contractor ([33:25]).
  • Revenue: Mid-single digit millions, steady 20%+ margins ([49:51]).
  • Repeat business, low customer concentration, but supplier concentration risk ([34:41]).

• Supplier Concentration Risk

  • Concentration with a single manufacturer (Hutchinson), but nuanced: 90% revenue comes from three distinct divisions, each with separate decision-makers and contracts ([35:15], [37:28]).
  • Mitigated by:
    • Meeting suppliers personally and securing renewed long-term distribution agreements ([41:44]).
    • Tying the seller note to retention of supplier relationships—“If they were to go away, the seller note would be forgivable.” ([43:44]).

5. Negotiation, Due Diligence, and Transition

• Seller’s Motivation: Not Retiring but Ready to Move On

  • Seller was not of typical retirement age but credibly ready for a new life phase due to family and personal considerations ([57:03]).
  • Addressing risk of "selling at the peak" or undisclosed issues: Relying on repeated probing, seller financing, and credible intermediaries ([59:38]).

• Process/Legal Lessons:

  • Jonathan’s first Letter of Intent (LOI) was a failure—he tried to “Frankenstein” templates, but was advised to invest in experienced legal support ([63:03]).
  • Quote: "Don’t play lawyer. Ideally just hire one or work with way more experienced people..." ([63:47])
  • Sales tax analysis: Additional $8K on diligence prevented $50K liability due to Wayfair nexus rules ([79:48]).

• F Reorg for Deal Structure

  • Used a complex “F Reorg” to blend benefits of stock and asset sales—enabled required supplier contracts to stay in place while mitigating legacy liability ([73:30]).

6. Investor & Exit Strategy Alignment

• Long-Term Hold Orientation

  • Jonathan advocated a long-term stewardship approach—wants to build compounding value over 7+ years, not a quick flip ([66:05], [71:15]).
    • “My philosophy is stewardship—I am just stewarding the business for its next phase.” ([72:23])

• Alignment with Investors

  • Only partnered with investors aligned with this philosophy; modeled an exit at year 7 (for the financials) but made intentions clear ([69:26]).
  • Liquidity for investors via dividends and potential later recapitalizations, rather than a short-to-medium-term sale ([68:30]).

7. Business Operations, Value Add, and Growth

• Day-to-Day Operations

  • Staff includes warehouse, shipping, quality, finance/HR, sales, and engineering. Direct customer value through technical advice and rapid supply ([52:26]).
  • Value-add: Not just a “middleman”—engineers on staff, technical support, custom solutions, certifications, repair, and kitting ([47:34], [49:07]).

• Process Improvements and Growth Levers

  • Paper-and-pencil systems and manual processes replaced with digital, improving sales velocity and customer experience ([84:49], [82:04]).
  • Proactive outreach to government contracts and more structured team meetings ([82:04]).
  • Plans to grow by deepening value-added services, developing long-term supply contracts, exploring repair and kitting ([85:19]).

• Early Results

  • Revenue grew ~40% and EBITDA ~30% in first eighteen months ([82:04]).

Notable Quotes & Memorable Moments

• On Doing a Deal While Employed:
  “Every two weeks you’re extending your runway. It helps you keep a high bar for quality.” – Jonathan Taylor ([10:34])
• On Ownership vs. Investor Alignment:
  “I have never thought one day about the percent ownership of the business that I own. I definitely feel a commitment to returning capital to my investors… but it was the absolute right decision.” – Jonathan Taylor ([26:22])
• On Supplier Risk in Distribution:
  “Often, people are looking at opportunities… It’s something to try to get a higher fidelity on—what is the decision maker concentration? Often you see the same logo, but dig deeper to truly understand it.” – Jonathan Taylor ([37:28])
• On Investor Alignment:
  “The need for investor alignment with the operator—searchers should really, really put a high emphasis on that.” – Jonathan Taylor ([88:05])
• On Persistent Search:
  “Just keep moving forward and keep making progress… The right business is out there if you just keep turning over those stones.” – Jonathan Taylor ([89:42])
• Will Smith’s Take:
  "Feeling tight on cash is the opposite of free. It's just a different type of prison." – Will Smith ([18:48])

Important Timestamps

• 00:00 – 02:00 | Episode intro, guest background
• 04:08 – 07:48 | Jonathan’s journey: family, tech career, and leap to business ownership
• 09:13 – 12:49 | Part-time search while employed, spousal involvement, bar for business selection
• 20:44 – 26:22 | Over-equitizing, capital structure, and peace-of-mind approach
• 33:25 – 36:21 | AEK Technology overview (industry niche, operations, supplier relationships)
• 41:44 – 44:05 | Supplier concentration risk, how it was mitigated (meeting suppliers, new contracts, seller note)
• 49:51 – 54:31 | Business size, margins, operations, and value-add
• 57:03 – 62:43 | Seller’s motivation, assessing credibility, diligence tips
• 63:03 – 63:47 | Mistakes in legal docs, getting proper counsel
• 71:15 – 73:24 | Long-term hold philosophy and stewardship
• 82:04 – 86:32 | Growth levers post-acquisition (process, people, digital transformation)
• 89:42 – 90:33 | Advice for aspiring searchers

Final Takeaways

• Stay True to Your Personal Risk Profile: Pursuing ETA part-time can work—provided your current role is flexible and your standards remain high.
• Prioritize Cash and Sleep: Over-equitizing sacrifices some ownership but reduces stress, keeps options open, and signals prudence to investors.
• Deep Diligence on Relationships: For distribution deals, look beyond supplier/customer "concentration" to true influence and contractual structure.
• Legal, Financial Diligence is Worth It: Don’t DIY legal docs or skimp on financial diligence like sales tax risk—even ‘optional’ diligence often pays for itself.
• Align with Investors Early: Philosophical fit (growth orientation, time horizon, expectations) matters as much as the numbers.
• Process and People Improvements Drive Growth: For many “boring” businesses, digital transformation, process upgrades, and customer responsiveness (not just aggressive sales) can unlock major growth.
• Remember Personal Stewardship: Jonathan’s long-term, people-first stewardship philosophy underpinned his operating approach and culture.

Further Resources

• Acquiring Minds on YouTube
• Sign up for episode summaries
• LinkedIn: Jonathan Taylor (link in episode show notes)

Closing Encouragement

“Just keep moving forward and keep making progress… the right business is out there if you just keep turning over those stones.”
—Jonathan Taylor ([89:42])

This summary skips non-content segments (ads, intros/outros) and focuses on the actionable tales and wisdom for aspiring acquisition entrepreneurs.