Jonathan Taylor·March 5, 2026

Growing Profits 30% in the First 1.5 Years | Jonathan Taylor Interview

Jonathan Taylor is a former Google and DoorDash product/operations executive (14-15 years in tech) who left at age 40 to acquire AK Technology, a stocking distributor of aerospace, defense, and industrial shock-and-vibration mounts founded in 1993 and based in the Los Angeles area. He conducted a self-funded, part-time search while still employed, confined his geography to a 30-minute commute from his LA home, and structured the deal with SBA debt (~65%), a seller note (~15%) tied to supplier retention, and equity (~15%) — deliberately over-equitizing by roughly $250k to reduce debt service and sleep well at night, ending up with 60% ownership. The business had 20+ years of steady 3-4% annual growth, gross margins consistently above 40%, mid-to-20% EBITDA margins on mid-single-digit millions in revenue, and strong repeat customer patterns. The primary risk was supplier concentration: roughly 90% of revenue flowed through three divisions of Hutchinson (an authorized distributor relationship), though each division operates independently with separate contracts and decision makers, and the business is a top-10 customer for two of those divisions. By 1.5 years post-close, Jonathan had grown top-line revenue ~40% and bottom-line profits 30%+, driven largely by digitizing the sales process (eliminating paper-and-pencil quote workflows), upgrading the ERP, deepening supplier relationships, and riding aerospace/defense market tailwinds — with planned strategic initiatives like a new website and expanded certifications still ahead.

Deal facts

sde ebitda: mid-to-20% EBITDA margins on mid single digit millions revenue
revenue: mid single digit millions (grew ~40% top line in first 1.5 years)
financing structure: SBA loan (~65% senior debt) + seller note (~15%) + equity (~15%) + transaction fees; over-equitized relative to minimum needed; guest wrote second-largest equity check; LLC operating entity under C-Corp holding for QSBS; F-reorg structure (stock deal with some asset sale benefits)
notes: Seller note forgivable (binary, not proportional) if any one of three Hutchinson supplier divisions departed within first two years. Sales tax escrow of ~$50k negotiated after QOV identified liability. Guest retained 60% ownership; investor group holds ~40%. Long-term hold orientation with dividends and potential future recap rather than planned exit. Seller had middle-market investment banker (not a regular broker). Deal located in Los Angeles area, ~25 miles from guest's home.

Why this business

Jonathan was drawn to AK Technology because it was a stable, cash-generating business with 20+ years of consistent 3-4% annual growth, gross margins above 40% since 2003, and strong repeat customer patterns (over 80% year-over-year customer retention). He wanted a real, established business to grow rather than starting from zero, and chose distribution in aerospace/defense because the business had deep supplier relationships and a niche technical moat (engineers on staff for customer support, stocking distributor status, chain-of-custody documentation). He specifically wanted to stay in Los Angeles and found this met both his financial bar and his wife's approval.

What's working

Top-line revenue up ~40% and bottom-line profits up 30%+ within the first 1.5 years of ownership
Digitizing the sales process: moved from paper-and-pencil quote handling to electronic systems, enabling faster quote turnaround and better win-rate tracking
ERP upgrade from MS-DOS-based system to modern platform enabling inventory intelligence and SKU-level inventory turns data
Deepened supplier relationships with all three Hutchinson divisions; signed new multi-year distribution agreements with two of the three, third in progress
Proactive government sales channel: grew from zero to over $100,000 in the first year
Over-equitizing the deal (bringing ~$250k more equity than required) reduced debt service, preserved cash on the balance sheet, and enabled the operator to sleep well at night and show up effectively for the team
Being a top-10 customer for two of the three Hutchinson divisions provides strong mutual dependency and leverage in negotiations
Market tailwinds in aerospace, defense, and industrial end markets benefiting the business
Improved employee benefits, bonuses, and equipment investment supporting team buy-in and morale
Conducted a proactive sales tax analysis ($8k spend) that uncovered ~$50k liability and enabled escrow negotiation before close

What's hard

Supplier concentration: ~90% of revenue tied to three divisions of Hutchinson (though each division operates independently with separate decision makers and separate distribution agreements)
Seller was not a traditional retiree (age ~50), raising questions about why he was selling; guest had to ask the same question in multiple ways over a year of getting to know him
Significant information asymmetry in small business acquisitions — there are things you cannot know until you are inside the business
Cash flow visceral stress: even with a conservatively financed deal, large supplier payments cause visible drops in the bank account that are emotionally challenging
Taking a material salary step down from a senior tech career; all former direct reports now earn substantially more
Distribution businesses are structurally harder to grow; guest could not articulate a clean growth thesis pre-acquisition and has relied more on process improvements and market tailwinds than the planned strategic initiatives (website, new certifications) which have not yet been implemented
Inventory management and working capital optimization is a learning curve; significant cash was tied up in inventory at acquisition
First LOI was a poorly assembled Frankenstein of templates; required an experienced investor (Michael Joris) to flag and fix
Long-term hold orientation created investor alignment challenges; Acquiring Minds Capital (the host's fund) passed on the deal partly due to duration mismatch

Notable quotes

Rather than try to achieve the maximum ownership stake, I actually overequitized the deal. Um and so brought more equity, the investment group brought more equity to the deal than than necessarily I needed to to close it.

Yes on legally I own 60% of this business but in the way that I feel and really believe is that I actually don't — I'm just stewarding the business and so I have a responsibility to be accountable for it.

My wife was really my first deal check and I'm sure she got tired of me asking hey babe can you see me running this type of business — would show the numbers and she would be like what are you doing Jonathan? like, this doesn't make any sense.

It was next to impossible to me to articulate like hey we're going to grow sales by just like improving the sales process — and just process improvements and market tailwinds and just understanding some of our customers and being there to support them, that's what's taken us to where we're at today.