Acquiring Minds — SBA Deal Structuring to Manage Risk in a Cyclical Industry
Podcast Host: Will Smith
Guest: Andrew Kurzrock, owner of Hopewell Sheet Metal Manufacturing
Date: February 5, 2026
Episode Overview
This episode features Andrew Kurzrock, who recently acquired Hopewell Sheet Metal Manufacturing, a 21-employee ductwork fabricator in Northern Virginia. The conversation explores Andrew’s unique path from the Department of Energy and Amphenol to entrepreneurship, the rationale behind his acquisition strategy, and the thoughtful way he structured his SBA-backed deal to manage risk in the cyclical construction industry. Emphasis is put on over-equitizing, careful working capital management, industry selection, and prioritizing personal freedom and risk mitigation over maximizing IRR.
Key Discussion Points & Insights
Andrew's Career Path and Motivations
- Background in Science & Government: Andrew’s early work was with national labs, emphasizing risk management (“a good education for me in risk management” — [06:29]). He left due to bureaucratic inertia and sought more operational and leadership experience in the private sector ([07:55]).
- MBA at Yale & the Influence of Search: At Yale, he was introduced to the search fund path by Professor A.J. Wasserstein, which opened his eyes to combining CEO-level responsibility with attractive financial risk/reward balancing ([12:14]).
- Corporate Learning at Amphenol: Andrew took on general manager roles for two large businesses, including an 1,800-person, multi-country operation. This instilled confidence and an approach to operational discipline and risk management ([21:36]).
- Lifestyle-Driven Entrepreneurship: The birth of his son motivated Andrew to find a more local, less travel-heavy path. Choosing to buy a business allowed him to stay close to home, remain a leader, and leverage his strengths ([22:55]).
Choosing the Self-Funded Search & Industry
- Self-Funded Search: Stock options from Amphenol provided the equity for his SBA-backed acquisition, enabling him to retain full control and avoid outside investors ([24:57]).
- Role of Ownership and Freedom: Andrew turned away from potentially more financially lucrative corporate paths in favor of autonomy and lifestyle ([26:45]).
- Target Criteria: He defined strict geographic limits (1.5-hour drive), an insistence on technical and product businesses, and leveraged his technical sales background to differentiate himself. He avoided government contracting, metal finishing, and machine shops due to personal fit and risk profile ([30:10], [33:28], [35:35]).
Sourcing the Deal
- Outbound Process: After limited success with bespoke emails and priority mail letters (due to deliverability and resonation issues), Andrew discovered cold calling was highly effective — “I had like a 50% hit rate picking up the phone and calling people, which...is a wildly high ratio” ([47:18]).
- Positioning: Marketed himself as a local industrial operator acquiring his next business — not as a generic searcher or outside capital ([42:37]).
Hopewell Sheet Metal Manufacturing — Business & Deal
-
Business Fundamentals:
- Founded: 1981; celebratory 45th anniversary ([51:21])
- Commercial ductwork is highly custom, labor-intensive, and regional due to high shipping costs — “the diesel fuel costs more than the duct” ([53:23])
- Strong customer stickiness due to custom work and local reputation
-
Deal Structure:
- Asset Purchase: Chose asset over stock for risk management ([68:35])
- Over-Equitization: Injected ~25% equity instead of the SBA minimum 10% ([74:42])
- Loan Size: Mid-sized (<$5M), with careful working capital calculation and a working capital line baked in ([69:26])
- Working Capital Management: Negotiated for both cash at close and a line of credit, recognizing the need for permanent vs. flexible working capital ([70:21])
- Risk Mitigation: Conservative leverage, seasonality planning, maintaining vendor terms, and a “don’t rock the boat” mentality post-close ([63:47])
Philosophy on Returns & Risk
- Not IRR Maximizing: Willing to sacrifice higher returns for lower risk, emphasizing personal freedom and cash flow over leveraged bets ([78:44]).
- Returns Philosophy: Inspired by Amphenol’s focus on revenue and profit growth rather than financial engineering — “I didn’t know how to run a business to maximize IRR... For me, that helps sleep at night” ([74:46], [78:44]).
- Investor Pressure: Points out how taking outside money forces an exit-oriented perspective (“putting the exit before the entry”) — not how he wanted to run a family business ([83:23]).
Due Diligence Approach
- Thesis-Driven Diligence: Used frameworks from national security (analysis of competing hypotheses) — focusing not on ticking boxes, but testing if the data supports his investment thesis: stable, compliant, enduringly profitable and potentially growth-oriented business ([84:32]).
- Industry and Market Research: Leveraged industry reports (IBISWorld, ICFo), trade shows, expert interviews, SCORE mentors, and SBDC resources for market validation ([86:43], [101:36]).
Memorable Quotes & Moments
-
On Corporate Risk:
“Would you rather be 35 and have failed but you tried... or would you rather be the SVP pushed out of your corporate career at 55? Which one's riskier?”
— Andrew, [12:41] -
On Searching Approach:
“I am going to step into this business and run it... I’m an operator, an industrial operator just like you.”
— Andrew, [42:52] -
On Industry Selection:
“I actually put... a no list. After the third metal finisher... I wasn’t comfortable with the high capex required... government contractors were on the no list...”
— Andrew, [35:35] -
On Why Over-Equitize:
“At least for a short period of time... that ability to say that I am not going to get myself in a bad way with the SBA because I've got at least the ability to keep making those debt payments for a short period of time, that helps sleep at night.”
— Andrew, [75:41] -
On Not Being IRR Focused:
“I realized I didn’t know how to run a business to maximize IRR...”
— Andrew, [78:44] -
On Diligence:
“The point is to say, do we believe that the business is compliant, stable... that makes good money that I do believe I can grow...”
— Andrew, [89:44] -
On Working Capital:
“You’re not going to be able to amortize that [permanent working capital line] – that’s why you can’t put your... cash on day one into a line of credit.”
— Andrew, [70:21] -
On Sourcing the Deal:
“Finally, in a fit of pique... I was so frustrated... I’m just going to call him. And... I had like a 50% hit rate picking up the phone and calling people...”
— Andrew, [46:20], [47:18] -
Tactical Tip:
“On the day of close, I had to get a cashier’s check... drove it from Washington to Philadelphia to counter deposit... make sure that your bank will support the closing mechanics to an attorney trust account, because mine didn’t.”
— Andrew, [98:53]
Important Timestamps
- 03:27 — Andrew introduces his background and early career
- 12:14 — Discovery of the search fund & entrepreneurship through acquisition concept
- 20:19 — Rise at Amphenol and why he left after becoming a general manager
- 24:57 — Financial capacity, motivations for self-funded search
- 30:10 — Search buy box: technical/product business within 1.5-hour drive
- 35:35 — Industry selection, creation of a “no list”
- 42:37 — How he personalized his outreach and the business owner-to-business owner approach
- 47:18 — Cold calling as the most effective sourcing tool
- 51:21 — Details on Hopewell Sheet Metal — regional, custom, relational business
- 63:47 — Deal structure, risk mitigation, over-equitization, working capital, and vendor terms
- 74:42 — Equity injection detail (~25% equity)
- 78:44 — Discussion on not optimizing for IRR
- 84:32 — Diligence methods: thesis-driven, industry intelligence, materiality
- 93:13 — Post-close transition and first months of ownership
- 98:53 — Tactical close warning: potential wire transfer issues
- 101:36 — Leveraging the Small Business Development Center (SBDC) resources
How It’s Going: First Months as Owner
- Focused on stability — “crawl, walk, run” — and maintaining customer and employee continuity ([93:13])
- Sellers provided a smooth, cooperative handoff
- Next quarter: focused on refining targeting and sharpening commercial strategy
- Commutes daily (1 hr 15 min), accepted as a trade-off for family stability and location ([97:55])
Practical Tips & Recommendations
- Cold calling can outperform email/mail for outbound small business owner contact, especially for niche businesses
- Build a “no list” to keep the search focused on what truly fits your skills/criteria
- Bake sufficient working capital and a line of credit into your SBA financing — understand the distinction between permanent and temporary capital facilities
- Over-equitizing can be a rational choice for risk mitigation, especially in a cyclical industry
- Use SBA Small Business Development Centers for industry reports and research
- Be aware of closing mechanics issues: some banks may not wire funds to an attorney trust account; plan logistics ahead of closing
For More
🔗 Andrew Kurzrock on LinkedIn
🔗 Acquiring Minds Podcast YouTube
🔗 Sign up for summaries & newsletters at acquiringminds.co
This episode is essential listening for anyone contemplating a self-funded acquisition, especially in cyclical, capital-intensive industries. Andrew’s blend of intellectual rigor, operational insight, and risk management acumen offers a practical, measured model for “acquiring minds.”