Scott Duncan·December 11, 2025

The 7 Year Collapse of an SBA Acquisition | Scott Duncan Interview

Scott Duncan, a Harvard Business School graduate and former medical device manufacturing engineer, did a self-funded search in New England and acquired F&M Tool and Die — an injection mold servicing and tooling shop — in mid-2018 for $3.6m (~3.5x blended EBITDA), financed almost entirely via an SBA 7a loan with no personal equity. The business collapsed over seven years through a combination of an owner-dependent professional-services business masked as a manufacturing business, an immediate loss of the most profitable customer when a key employee defected, COVID-driven shutdown, steel price spikes that left him underwater on long-cycle mold build contracts, and a post-2022 demand hangover as customers drew down excess inventory. Scott made a strategic pivot toward injection molding production (razor-and-blade model) that briefly seemed promising, but deteriorating market conditions and an ill-timed facility move in early 2023 began the final decline. By late 2024 the business was generating $600k-$1.2m/year in revenue against a structure built for $5-6m; in early 2025 the business went through an Article 9 sale and Scott filed personal Chapter 7 bankruptcy. Despite deep personal costs — years of depression medication, marriage counseling, financial ruin — Scott remains enthusiastic about ETA and says he would search again.

Deal facts

purchase price: $3.6m
multiple: ~3.5x EBITDA (blended prior years; 2017 peak year was ~3x)
sde ebitda: EBITDA ~$1.2m (2017 peak year); ~25% EBITDA margin on ~$3.6-4.2m revenue
revenue: ~$3.6-4.2m at time of purchase
financing structure: SBA 7a loan (~80%) + 10% seller note + 10% investor equity; buyer contributed no personal capital
notes: Closed mid-2018. Buyer retained 80% of common equity. Monthly SBA debt service ~$32k. Business ultimately went through Article 9 sale in early 2025 followed by personal Chapter 7 bankruptcy.

Why this business

Scott chose F&M Tool and Die because it resonated personally — as a mechanical engineer he had always been fascinated by machining and had run CNC machines in college co-ops. The size, price, and location (New England, close to family) were right. He liked that the average repair ticket was ~$2,500, creating highly repeating if not technically recurring revenue, which seemed ideal for an ETA business. He also felt he had genuine buyer-business fit given his manufacturing engineering background.

What's working

2019 partial recovery: implemented EOS, rebuilt revenue close to 2018 levels, serviced debt
Pivot toward injection molding (making plastic parts) starting 2021 gave the business a razor-and-blade annuity model with strong customer switching costs
Post-COVID surge in 2021-2022 drove bookings to $400-500k/month, briefly looking like a $5-6m/year business
Hiring a strong office manager (Cindy) after the theft incident was a silver lining
Scott describes gaining genuine resilience as an operator through managing the business through crisis, which he sees as a rare and valuable skill set

What's hard

Key employee quit in month one and went into business next door to the second-largest customer, taking that account with him; account was 10-15% of sales but ~50% of EBITDA
New office manager hired before close stole from the seller within two weeks, forcing her firing
Business was actually a professional services / relationship business built around the seller (Mike), not systems and processes — Scott totally missed this in diligence
Highly skilled mold makers are extremely difficult to manage, have low loyalty, and the supply in the Northeast is very limited
Steel prices increased 240% in 12 months (2021), leaving the business deeply underwater on fixed-price long-cycle mold build contracts
Post-COVID demand surge in 2021-2022 reversed sharply in 2023 as customers drew down excess inventory and froze capex spending
Business model shifted from preferred service/repair (small tickets, fast-turn) to project-based new mold builds (large tickets, 18-month cycles, high uncertainty) — the exact opposite of a search-friendly model
Small regional SBA lender had no workout team and no expertise in restructuring; bank did not meaningfully engage until Scott missed a payment
Vendors hired private investigators, called his wife's cell phone, and emailed his father-in-law; a police report was filed from another state alleging theft
Scott was on depression medication from spring 2020 onward; went through marriage counseling; described becoming 'a shell of a human being'
Business went from booking ~$6m/year to shipping ~$600k-$1.2m/year by late 2024; Article 9 sale completed early 2025, followed by personal Chapter 7 bankruptcy

Notable quotes

I actually think this was a professional services business because just like a law firm or an accounting firm, the talent leaves the building every day when it's closing time. Like the machines continue to run sometimes, but it was the people who made the machines run. They were buying from Mike who enabled it all and Mike was obviously the seller and that's why everyone was uncomfortable because everyone knew that except for me.

I was told that this account was super unprofitable and then when I went back and I looked at the data in the ERP system like wow this is the most profitable stuff we have in the shop.

I became quite honestly I became a shell of a human being. Like I would go in when it was dark and I would just deal with problems all day and then I'd pick the kids up and my wife would come home when it was dark and we were strangers living in the same house.

The only way to get people to negotiate with you is to stop paying them because you can have all of these other conversations but they really only take notice when the check doesn't show up.