In This Issue: 

• How to Lose Everything in 12 Months: The Dangers of Leverage + Low Margins

• What We’re Watching: Earnings Rollercoaster for META and MSFT, U.S Government Shutdown 2.0 and Apple’s AI Partnership with Google

• Deal of the Week: We found a cash flowing Electrical Contracting Business in NC ($162k of Cash Flow). Click HERE for the listing (Deal Review Below)

• Live Streams: We’re officially at the 30 day mark of consistent livestreams on YouTube! Thank you to everyone who joined! If you missed anything, here’s the new highlights channel (pls subscribe!)

  https://www.youtube.com/@KennyFinanceLive

EZ-Pass to Losing Everything…

Buy a business with maximum leverage and hope for the best.

Everyone wants to be in private equity these days.

The pitch sounds perfect: buy a profitable small business, use mostly debt, scale it, exit rich.

Except most people skip the part where institutional PE firms spend months stress-testing the downside.

The formula you see online is dangerously simple:

Find a 15% margin HVAC business at 5x EBITDA. Finance it with 80% SBA debt. Raise 10% seller financing. Convince a "family office" to fund the rest.

What could go wrong?

Everything.

Here's what the finfluencers don't mention:

That 15% margin? It might not survive:

• A recession

• Rising labor costs

• One bad winter

Your debt service doesn't care about seasonality.

Most first-time buyers never model the bear case.

They don't ask:

• What happens if revenue drops 20%?

• What if margins compress to 10%?

• Can the business still service debt?

Real PE firms obsess over debt service coverage ratios. They model three scenarios—base, bear, and worst case. They leave cushion.

Because the math is brutal when you're wrong.

If your EBITDA drops and you're levered 5x, you're not building wealth.

You're working for the bank while your equity evaporates.

The right sector matters. But sustainable cash flow under stress matters more.

The institutional playbook:

→ Underwrite to the downside, not the pitch deck
→ Assume Murphy's Law applies to your pro forma
→ Build margin of safety into your capital structure

Leverage amplifies returns. It also amplifies mistakes.

Deploy it like your life savings depend on it—because they do.

WHAT’S HAPPENING IN THE MARKETS?

• Meta's AI Spend Gets a Pass, Microsoft's Doesn't

  Meta surged 8% post-earnings while Microsoft plunged—both spent heavily on AI, but only one convinced investors it's working. Meta's capex got approved; Azure's growth slowdown didn't. ServiceNow fell on fears AI erodes software margins entirely.

  Why it matters: The market is bifurcating AI winners from pretenders. Meta showed direct monetization through ad targeting and engagement. Microsoft showed expense without proportional Azure acceleration. This isn't about spending—it's about proof of return. Software multiples compress when AI threatens recurring revenue models. Own the infrastructure and models, not the application layer getting commoditized.

• Government Shutdown Fight Exposes New Fault Lines

  Senate leaders struck a bipartisan funding deal but couldn't secure quick passage—objections from both sides delay the vote. The package separates DHS funding (two-week extension) from other agencies funded through September, revealing friction over ICE enforcement tactics.

  Why it matters: Shutdowns create volatility in government contractors and delay procurement cycles. More interesting: DHS separation signals immigration enforcement is the new third rail—even Republicans are squeamish about ICE optics. Defense and HHS contractors get clarity; border tech and detention facility operators face recurring uncertainty. Avoid exposure to DHS-dependent revenue until this stabilizes.

• Apple Outsources Siri's Brain to Google

  Apple is using Google's Gemini to power the next-gen AI Siri, finally entering the AI race after sitting out the initial frenzy. This ends months of speculation about Apple's model strategy.

  Why it matters: Apple just admitted it can't build competitive AI in-house fast enough. This validates Google's enterprise model push and creates leverage risk for Apple—margin pressure if Gemini licensing costs rise, and strategic dependence on a competitor. It also signals the AI stack is consolidating: a few model providers (OpenAI, Google, Anthropic) will power most consumer applications. Build vs. buy is settling toward buy.

DEAL OF THE WEEK

Central NC Electrical Contracting Business
Price: $400K | SDE: $162K | Multiple: 2.5×

Investment Summary

Licensed residential and commercial electrical contractor serving Alamance and Guilford counties in North Carolina. Nearly 10 years in operation with $912K in revenue and 18% margins. Staff in place, diversified service mix from maintenance calls to ground-up installations.

This is skilled labor arbitrage in a supply-constrained market. Electricians are scarce, demand is structural, and pricing power is real.

Financials & Structure

• Revenue: $912K

• SDE: $162K (18% margin)

• FF&E: $154K included

• Service area: Alamance and Guilford counties (Greensboro-Burlington corridor)

Investment Thesis

The electrician shortage isn't easing—it's accelerating. Bureau of Labor Statistics projects 11% growth through 2032, but retirements outpace new apprenticeships. North Carolina's population growth and commercial buildout in the Research Triangle create persistent demand while supply remains capped by licensing requirements and training timelines.

This business sits in the profitable middle: too large for handyman competition, too nimble for national chains. Residential service calls provide steady cash flow. Commercial projects deliver margin. The mix creates revenue stability without dependence on new construction cycles.

At 2.5× SDE, you're buying established customer relationships, a trained crew, and contractor licenses that take years to obtain. The Triangle's explosive data center growth and grid infrastructure upgrades create clear expansion vectors into higher-margin industrial work.

Critical Diligence

Staff retention: How many licensed electricians on payroll? Comp structure? Non-competes? Losing a master electrician post-close kills the business.

Revenue mix: Service calls vs. project work breakdown? Service = predictable, lower margin. Projects = lumpy, higher margin. Ideal is 60/40.

Customer concentration: What % from top 5 customers? Any commercial contracts at rebid risk?

Backlog and pipeline: What's contracted vs. quoted? Growth claims need supporting evidence.

Expansion readiness: Has the business pursued data center or utility work? If not, why? Moving upmarket requires different bonding, insurance, and capabilities.

Bottom Line

Infrastructure arbitrage in a constrained labor market. Electricians are expensive and hard to find—this business already has them. The Triangle's commercial and industrial growth creates a decade-long tailwind. Layer in targeted business development toward data centers, EV charging infrastructure, and solar installations. At 2.5× on a recurring revenue base with pricing power, the risk-reward is compelling. Hire a BD lead, formalize sales processes, pursue commercial GC relationships. $162K is the floor.

Listing is still available here.

This newsletter is for informational purposes only and does not constitute investment advice. The content is based on publicly available information, and the author makes no representations about its accuracy or completeness. Readers should conduct their own research before making any investment decisions.