The Case for Under-Levering and Adding Cash to Balance Sheets

Jared Johnson sits down with investor and operator Adam Markley to trace a winding path from nearly failing out of college to building and backing small businesses. Adam shares how a pivot into accounting and finance opened doors to hands-on work with small companies, a corporate run standing up deal-driven divisions, and ultimately his own acquisitions in the U.S. and U.K. He talks candidly about painful lessons (from paying loans out of pocket to a partner emptying accounts), why seller behavior is a leading indicator of post-close reality, and how his team now invests with a heavy emphasis on in-person site visits and back-office execution. Adam explains his four-pillar support model for new owners, common pitfalls in lender relationships, and where he thinks ETA is headed as underwriting tightens and off-market search professionalizes.

Main Takeaways:

• Curiosity and repetition win: reviewing dozens of deals monthly builds judgment you cannot shortcut
• Seller character and the buyer–seller relationship are core drivers of post-close success
• Site visits late in diligence provide a critical gut check before funding and close
• The first 6–12 months are won by focusing on four buckets: people, operations, sales, and processes
• Outsourcing or wrapping expert back-office support can save hundreds of hours during transition
• Investor fit matters: clear expectations on equity step-ups, preferred returns, and long-term horizons
• Off-market search is professionalizing; few individuals can excel at every part of the search lifecycle alone
• Expect tighter SBA underwriting (e.g., DSCR definitions, post-close liquidity) to favor better-capitalized buyers
• Personal financial discipline signals readiness to operate and builds lender and investor confidence
• Under-levering and adding real balance-sheet cash can improve outcomes and optionality post-close

Episode Highlights:

• Background reset: from almost failing out to finishing an accounting/finance degree early and working with small-business clients
• Early exposure: regional public accounting, seeing owners scale and realizing business + real estate wealth patterns
• Corporate chapter: building deal-led divisions (JVs, partial acquisitions), then buying and spinning out an education company on acquisitions
• Hard lessons: U.K. operating partner empties accounts; replacing a non-owner president post-close; paying loans personally
• Portfolio today: eight active businesses, four acquired with SBA loans; shifting from primary acquirer to minority investor
• Investment approach: won’t invest without a site visit; observe seller–buyer dynamics as a final diligence gate
• Back-office leverage: running or wrapping accounting/finance/admin to free operators for customers, people, ops, and sales
• The four-pillar support model: inner circle (family/peers), peer groups, strategic investor sounding board, and day-to-day back office
• Working with lenders: create a real feedback loop; understand how banks calculate DSCR and post-close liquidity
• Market outlook: more competition, more specialization in off-market sourcing, and likely stricter SBA expectations
• Motivation: be the resource he wished he had—review deals freely, build community (Denver meetup; Rocky Mountain ETA efforts)

Connect with Jared:

If you have questions for Jared, visit: https://jaredwjohnson.com

https://www.linkedin.com/in/jaredwjohnson/

Connect with Adam: https://www.linkedin.com/in/adammarkley/

DISCLAIMER:

The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer.

Keywords:

entrepreneurship through acquisition, ETA, SBA loans, DSCR, deal sourcing, off-market search, seller diligence, site visits, back-office integration, first 100 days of ownership, small business operations, minority investing, equity step-ups, preferred return, post-close liquidity, investor alignment, buy-and-build, small business portfolio, lender relationships, transition planning