Burk Adams·November 15, 2022

How to Buy a $2.3m Business with $100k | Burk Adams Interview

Burk Adams is a chemical engineer turned 17-year independent engineering consultant who, burned out from constant travel and a dark career outlook at age 47, bought PC Enclosures — a B2B manufacturer/distributor of metal enclosures for TVs and computers (used in food plants, hospitals, and other industrial environments) — in mid-2015 for $2.3m ($2.6m all-in). He financed the deal with a $2m SBA loan, $300k seller note, and ~$300k of his own money, roughly $200k of which came through a ROBS (Rollover for Business Startups) structure that allowed his 401k to own 65% of the C corp. The first four months were harrowing — sales hit near-historic lows as the seller had disengaged pre-close — but Burk stabilized the business through full engagement and grew it from ~$1.6m revenue and ~$650k SDE to $3.5m revenue and $1.2m SDE over seven years, while keeping headcount at just 8 employees by outsourcing all manufacturing and focusing on inventory, pricing discipline, and e-commerce. Along the way he co-founded an outdoor TV cover brand (sold on Amazon) that now runs at ~$4.5m in sales and is expected to be rolled up with his partner's larger company for a multiple arbitrage exit. Burk is now actively planning to do it again with his sons, and is an emphatic advocate for acquisition entrepreneurship as a life-changing path.

Deal facts

purchase price: $2.3m
sde ebitda: SDE ~$650-700k at acquisition; ~$1.2m SDE at time of interview
revenue: $1.5-1.7m at acquisition (~$1.6m normalized); ~$3.5m trailing 12 months at time of interview
financing structure: $2m SBA loan + $300k seller note + $300k buyer equity (including ~$200k from ROBS/401k rollover plus HELOC and personal cash); total all-in cost ~$2.6m including $200k working capital and ~$100k closing/other fees
notes: Buyer used ROBS (Rollover for Business Startups) structure via Guidance Financial; formed C corporation as required; 401k owns 65% of C corp stock, buyer personally owns ~35%. Business (PC Enclosures) founded 2006, acquired mid-2015.

Why this business

Burk was burning out as a road-warrior engineering consultant with no clear path forward. He wanted to replace his salary (~$300k range), be home with his family, and stop flying constantly. He had no strong passion for PC Enclosures specifically — he could find no flaw in it and kept walking down the path. His criteria were simple: replace his salary and have a lifestyle business he could run for 10 years, pay off the SBA loan, and build equity.

What's working

Holding prices steady through COVID and supply chain disruptions, taking market share from competitors who raised prices
Building inventory over time to reduce lead times and close larger orders (e.g., hospital orders of 50+ units)
Outsourcing all manufacturing to third parties while controlling IP and design — running a $3.5m revenue business with only 8 employees
ROBS structure enabled the acquisition with limited personal cash (~$100k liquid); 401k's 65% ownership means a large exit proceeds portion stays tax-deferred
Slow but steady growth compounded over 7 years: revenue roughly doubled from ~$1.6m to ~$3.5m; SDE grew from ~$650-700k to ~$1.2m
B2B niche with high-quality, durable product that generates repeat and referral orders from existing customers
Side venture (outdoor TV cover sold on Amazon/FBA, co-founded with a friend) grew from $800k in year 1 (2018) to $3.5m (2021) to $4.5m projected; being rolled up with partner's larger company for potential multiple arbitrage at exit

What's hard

First 3-4 months after acquisition saw the third-lowest monthly sales in company history — seller had taken his hand off the wheel before closing, causing a lag that hit right after transfer
Non-recurring revenue (only 25-40% recurring) created persistent anxiety about refilling the sales bucket each month
Slow growth for first 4 years — no rapid inflection; took 7 years to double revenue
20% year-over-year growth since 2019 has been exciting but destabilizing — shaking up every system, requiring warehouse expansion, equipment, and headcount restructuring
Key employee (original co-founder/brother, who served as general manager, IT, operations, and marketing) just gave notice after feeling his role being reorganized away during the growth retooling
C-corp structure required by ROBS creates double taxation complexity and limits structural flexibility vs. LLC
Amazon inventory dynamics caused false demand signals: Amazon loaded up in fall 2021 on the TV cover product, then stopped buying in spring 2022, creating a whipsaw

Notable quotes

I was projecting the next 15 years of my career and just saying I just don't think I can do this.

It was a bet and the way I looked at it was hey look if it all crashes and burns if it goes to the ground what am I going to do and my answer was I'm gonna go consult by the hour for the next 15 to 20 years and the answer is if I didn't do it what was I going to do I was going to go consult by the hour for the next 15 to 20 years.

Every month that SBA payment comes out and the seller payment comes out — to me, now my new mortgage was $27,000 a month. But it reminds you every month that you're earning equity in the company.

It took me until about six months ago — so six and a half years into owning my company — to realize that I owned an e-commerce business, not a manufacturing business, because we don't manufacture anything.

I'm able to do three and a half million in sales with eight people. I don't have to have 30 people and that's a totally different organization.