Podcast Summary: Acquiring Minds — The 7-Year Collapse of an SBA Acquisition

Host: Will Smith
Guest: Scott Duncan (Former owner, F&M Tool and Die)
Date: December 11, 2025

Episode Overview

This episode features an in-depth, cautionary tale of business acquisition gone wrong. Scott Duncan shares his seven-year journey from acquiring a promising tool and die business with SBA financing to ultimately shutting it down and declaring personal bankruptcy. The conversation is candid, detailed, and emotionally raw, offering valuable lessons on diligence, management, resilience, and the harsh realities underlying entrepreneurial risk. Scott pulls back the curtain on every aspect of his experience—the deal, operating challenges, culture shocks, COVID, burnout, and personal ramifications.

Key Discussion Points & Insights

1. Origin Story: Why Acquisition & Why This Business?

[04:46–08:22]

• Scott’s interest in ETA (Entrepreneurship Through Acquisition) sparked during business school. Disillusioned by his startup work never reaching market, he wanted a business that provided tangible value.
• Background: Mechanical engineering, hands-on manufacturing experience; perceived strong buyer–business fit.
• Chose self-funded search for lifestyle reasons and geographic roots in New England:
  • “I didn't want to be a hired gun. …I thought this was going to be something I was going to do for 20 years, 25 years. And …that was really not compatible with a traditional search.” — Scott Duncan [07:31]

2. Search Methodology & Acquisition Process

[10:16–17:12]

• Lean search with only ~$60k savings, focused on New England, mostly brokered deals, minor proprietary outreach.
• First found F&M Tool and Die early but initially passed due to bad “vibes”—came back later after no better options.
• Parameters: Looking for $500k–$850k SDE businesses, but would need outside equity.
• Description of the business: Injection mold servicing (critical, highly skilled, low-volume emergency repairs).

3. The Deal Structure

[24:52–32:16]

• Acquired for $3.6M, about 3.5x LTM EBITDA.
• Funded with 10% seller note, 10% investor equity, and 80% SBA 7A loan.
• Notably, Scott put in no actual cash equity—“The day we closed I had like $2,000 to my name…I put none of my own money in.” — Scott Duncan [31:06]
• Retained 80% of common equity due to the self-funded structure.

4. Early Warning Signs & Cultural Headwinds

[33:07–44:51]

• Immediate employee and customer skepticism; culture fit was poor.
• Key learning: Management/leadership style of the previous owner mattered even if employees complained: “Despite all these guys saying they didn't like working there, most of them had worked there for decades…and every day…were continuing to…double down on…the management style…” — Scott Duncan [35:01]
• The “vibe” was a critical, underestimated due diligence factor.

5. Catastrophic Setbacks: Key Person Dependency

[35:56–39:19]

• Within first month, lost a key employee servicing largest customer (10–15% revenue, nearly 50% EBITDA), who set up shop next door at that customer.
• “So like, all half of EBITDA gone in the first six months.” — Scott Duncan [36:53]
• Customer concentration should be considered in EBITDA terms, not just revenue.
• Failure to diligence sources of profit and true key dependencies.

6. Layering Crises: Theft and COVID

[40:31–43:29]

• New office manager (hired to replace a 40-year veteran) stole thousands via credit card fraud, compounding the stress.
• Mold makers: technically brilliant, but “prima donnas”, hard to retain/manage; unique skillset scarcity contributed to instability.

7. Misunderstanding the Nature of the Business

[46:13–48:09]

• The business was more like a professional services firm than a manufacturing company—deeply dependent on owner’s expertise and relationships: “It was a relationship business… They were buying from Mike [the owner], who enabled it all.” — Scott [47:00]
• Due diligence tip: Get lunch with the owner, see how frequently the phone rings ([48:02]).

8. Recovery…Then More Downturn

[49:29–51:00]

• Initial year (2018) was disastrous, but 2019 saw recovery: new systems, improved trust, bookings returned.
• At end of 2019, bookings dried up leading into COVID lockdown.

9. Pandemic Wreckage & Inflation Shock

[51:02–57:01]

• COVID forced layoffs and business closure; payroll kept afloat with PPP and loan deferment.
• Post-COVID, rapid inflation hit—steel prices jumped 240%. Long project sales cycles meant jobs quoted pre-inflation were deeply unprofitable.
• “We ended up on these massive jobs underwater from the price of steel.” — Scott [56:06]

10. Attempted Strategic Pivot: Injection Molding Expansion

[57:16–64:30]

• Opened new injection molding operation to stabilize revenue (“razor and blade” model).
• Pivot felt like Scott’s true “ownership moment” but was more forced adaptation than bold strategy.
• Customer base changed; many older technical contacts retired or companies sold/shuttered—degraded business relationships and knowledge transfer.

11. The Final Stretch: False Dawns and Inevitable Decline

[64:43–70:53]

• Moved to a larger, purpose-built facility—ironically, it marked the beginning of the end.
• Post-COVID overordering led to demand crash in ‘23.
• Couldn’t downsize fast enough; order cycles became erratic, uncertainty paralyzed decision-making.
• “Every day became a bet on what was going to happen next month.” — Scott [70:53]

12. Emotional and Personal Toll

[71:48–74:05]

• Crippling anxiety, depression, marriage strains, medication, therapy (“I became a shell of a human being.” — [73:36])
• “Every time we review this, it’s worse than it was before. And I cannot believe it can keep getting worse.” — (Scott quoting his wife) [72:50]

13. The End: Shutting Down, Bankruptcy, Aftermath

[74:20–92:16]

• Bank and vendor relationships disintegrated—aggressive collections, legal threats, investigator harassment.
• “The only way to get people to negotiate with you is to stop paying them.” — Scott [76:34]
• Ultimately navigated an Article 9 asset sale; staff laid off, personal and business Chapter 7 bankruptcy ensued.
• Deep shame and humiliation of the process, but relief upon final closure: “It was relief punctuated by…grief.” — [88:02]
• “The feeling of failure rarely entered my head. But it was grief…grief for what could have been, loss of purpose, loss of identity.” — Scott [90:09–90:49]

14. Reflections: Would He Do It Again?

[92:16–98:23]

• Not only doesn’t regret it—but open to searching again: “I still love the model. I actually still love manufacturing with some caveats… I would be shocked if I do not end up searching again.”
• Bankruptcy exists for a reason; developed unique “battle scars” and resilience.
• ETA community was highly supportive post-story; no “mark of shame.”
• Final advice: “If this is not something that you can foresee yourself going through, then maybe it’s not a really, really viable career path for you because somebody has to be on this side of the bell curve. And I think it ends up happening more than people realize.” — [97:51]

Notable Quotes & Moments

• On early signals:
  “I'm much more of a vibes guy now...I wish I trusted my gut.” — Scott [49:00]

• On the cost of losing one key customer:
  “They were probably about half of EBITDA...so like, all half of EBITDA gone in the first six months.” — Scott [36:53]

• On due diligence:
  “Get lunch with the seller and see how often their phone rings.” — Scott [48:02]

• On culture fit:
  “The personality match matters just as much [as technical skills]…” — Scott [35:01]

• On the emotional cost:
  “I became a shell of a human being…I was on depression medication, marriage counseling…” — Scott [73:36]

• On resilience and repeat:
  “Regret is not something I feel…It is what it is; I’ve come to embrace that it is what it is.” — Scott [91:05]

• Final advice:
  “If this is not something that you can foresee yourself going through, then maybe it’s not a…viable career path for you…” — Scott [97:51]

Timestamps for Major Segments

• Background & Search Setup: [04:46–13:06]
• Business Description & Deal Terms: [17:13–32:16]
• Cultural & Operational Reality: [33:07–44:51]
• Catastrophe: Key Employee Departure: [35:56–39:19]
• COVID, Inflation, and Pivots: [49:47–64:30]
• Emotional Toll & Personal Fallout: [71:48–74:05]
• Unwinding & Bankruptcy: [79:02–92:16]
• Reflections / Advice for Future Searchers: [92:16–98:23]

Lessons & Takeaways

• Key person risk and business model “fit” are often underestimated; EBITDA concentration > revenue concentration.
• Owner “talent” and customer relationships are both intangible and invaluable—hard to diligence but critical.
• Entrepreneurial risk has “teeth”—emotional, financial, social. Prepare for the worst, hope for the best.
• The search/acquisition pathway, while attractive for upside, is statistically risky and demands resilience.
• Scott’s story is both a reality check and an example of resilience; speaks honestly to the survivable, if searing, downside that’s too rarely discussed.

For more stories, technical webinars, and episode summaries, visit acquiringminds.co.