The Operator Problem: Why Most Business Acquisitions Fail (And How to Fix It)
The most important person in any acquisition isn't the buyer. It's the operator.
I've been involved in business acquisitions for over 20 years — corporate advisory, private equity, and now buying blue-collar businesses myself. The deals that work have one thing in common: the right person running the business day to day. The deals that don't work? Usually the same problem.
Nobody figured out who should actually run the thing.
If you're planning to buy a business and run it yourself — great. You're the operator. This post probably isn't for you. But if you're buying as an investor and installing someone else to manage the operation, this is the single most important decision you'll make. More important than price. More important than the industry. More important than the deal structure.
Get the operator wrong and nothing else matters.
The Operator Gap
Here's the situation most buyers find themselves in.
You buy a business. The owner is leaving — that's the whole point. They've been running everything: the team, the customers, the suppliers, the daily decisions. And now they're gone.
Someone needs to fill that gap.
Your options are usually three:
You run it yourself. Fine, if that's the plan. But it means you've bought a job, not an investment. There's nothing wrong with that — lots of great businesses start this way. Just be honest about what you're doing.
You promote from within. This is the most common choice. And in my experience, it's usually the wrong one.
You hire an external operator. Harder to find. More expensive upfront. But often the difference between a business that grows and one that slowly dies.
Let me explain why promoting from within is riskier than it looks.
Why the Existing Team Usually Isn't the Answer
The operations manager has been there for eight years. She knows the business inside out. She's reliable, competent, and the team respects her. Promoting her seems like the obvious move.
It's also the move I'd think twice about.
Here's the problem: the people already in the company were hired and shaped by the previous owner. They learned to operate within the systems that owner built — or didn't build. They're adapted to the status quo. That's not a criticism of their ability. It's a structural reality.
When you buy a business to transform it — to add AI, improve systems, grow margins — you need someone who thinks differently about how the business could run, not someone who knows exactly how it does run.
There's another issue. The existing team member has a reference point: the previous owner. Every decision she makes will be compared against "how the old boss did it." That makes change harder, not easier. And change is usually why you bought the business in the first place.
I'm not saying it never works. Sometimes the right person is already there. But you should assume they're not the answer until you've proven otherwise, not assume they are because it's convenient.
What a Good Operator Looks Like
The operator you want has a specific profile. It's not the most experienced person in the industry. It's not the cheapest hire. It's someone with a particular combination of traits:
Operational discipline. They build systems without being asked. They document processes. They measure things. If they join a business running on tribal knowledge and gut feel, they'll be uncomfortable — and that discomfort is your advantage.
Commercial awareness. They understand that the business exists to make money, not to be a nice place to work. That doesn't mean they're ruthless. It means they connect daily decisions to financial outcomes. They know what a 5% margin improvement looks like in practice.
Adaptability. They've worked in different environments, not one company for 15 years. They've seen multiple ways of doing things and can pick the best parts. People who've only ever worked one way tend to defend that way, even when it's not the best.
Leadership without authority. In the first 90 days, they won't have earned the team's full trust yet. They need to be able to lead through competence and clarity, not just title. The best operators I've worked with earn respect by making the team's life easier, not harder.
Alignment with your timeline. If you're planning to hold the business for five years and grow it, you need someone who wants to build something, not someone looking for a stepping stone to their next role.
How to Find the Right Person
You won't find this person on Seek.
The best operators I've encountered come through three channels:
Industry networks. Talk to other business owners in adjacent industries. Ask who the good operators are. The trades and services world is smaller than you think — good people are known.
Former colleagues. People you've worked with in previous roles who have the operational skill set but maybe haven't had the opportunity to run their own show. These are often the most motivated hires because they're ready for the challenge.
Executive search for senior roles. If the business is large enough ($2M+ revenue), a targeted search through a specialist recruiter can work. But for smaller acquisitions, your network is more effective and more honest.
The interview process should be practical, not theoretical. Don't ask them how they'd manage a team. Give them a real operational problem from the business and watch how they think through it. Ask them to walk you through a system they built from scratch. Ask about a time they improved a process that everyone said was "just how we do it."
The Incentive Problem
Here's the thing most buyers get wrong.
You hire a great operator. You pay them a market salary. And then you wonder why they don't think like an owner.
They don't think like an owner because they aren't one. A salary rewards attendance, not outcomes. A bonus tied to revenue rewards growth at any cost. Neither of these aligns with what you actually want: someone who treats the business's money like their own.
The operators who perform best are the ones whose compensation is tied to the business's real performance. Not just revenue. Profit. Specifically, the kind of profit that comes from running the business well — not from cutting corners or deferring maintenance.
Here's the structure I prefer:
Base salary at 70–80% of market. Enough to be fair, not enough to be comfortable. The gap between their base and what they could earn elsewhere is the motivation to perform.
Profit share on EBITDA above a baseline. Set a realistic EBITDA target based on the business's historical performance. Everything above that baseline, the operator gets a percentage — typically 10–20%. This aligns their incentives with yours: grow the profit, both of you win.
Equity or phantom equity for long-term holders. If you're planning to hold the business for several years, consider offering a small equity stake (5–15%) or a phantom equity arrangement that pays out on a future sale. This is what turns an employee into a partner. They start thinking about the business's value, not just this year's numbers.
The key principle: the operator should feel the pain when the business underperforms and the reward when it overperforms. Symmetry matters. If they only share in the upside, they'll take reckless risks. If they only share in the downside, they'll be too conservative.
The First 90 Days
Once you've found the right person and structured the incentives correctly, the first 90 days are critical.
Week 1–2: Listen. The operator should spend their first two weeks understanding the business as it is. Talking to every team member. Sitting with customers. Reviewing every process. Not changing anything yet. Just learning.
Week 3–4: Identify quick wins. Every business has obvious problems that the previous owner never got around to fixing. Broken scheduling software. Invoicing delays. Equipment that should have been replaced two years ago. Fix the easy things first. It builds credibility with the team and generates early momentum.
Month 2: Start the real work. This is when the operator begins implementing the changes that matter. New systems. New processes. New ways of measuring performance. This is where AI comes in — automated quoting, intelligent scheduling, predictive maintenance. The operator doesn't need to be a technologist. They just need to be willing to use tools that make the business run better.
Month 3: Measure and adjust. By the end of the first quarter, you should have clear metrics showing whether the changes are working. Revenue trends. Margin movement. Customer retention. Team turnover. If something isn't working, adjust. If something is working, double down.
The Relationship Between Buyer and Operator
If you're the investor and they're the operator, your relationship is the most important business relationship you'll have.
Be clear about roles. You set the strategy and the financial targets. They run the operation. Don't meddle in daily decisions. Don't second-guess their team management. But do hold them accountable for the numbers.
Meet weekly. A 30-minute call every week to review performance, discuss challenges, and align on priorities. Not a status report — a working conversation. If you're not talking weekly, you're not paying attention.
Give them autonomy with accountability. The worst thing you can do is hire a great operator and then micromanage them. Give them the freedom to run the business their way, but hold them to the financial outcomes you've agreed on. If they miss targets, have the conversation. If they hit them, get out of their way.
Invest in their development. The operator who grows with the business is worth ten times the one who stays static. Send them to industry conferences. Pay for executive coaching. Introduce them to your network. The business benefits when they get better.
The Bottom Line
Buying a business without a plan for who runs it is like buying a car without knowing how to drive.
The operator is the difference between an acquisition that compounds in value and one that slowly declines. They're the person who turns your capital and strategy into daily decisions that either grow the business or shrink it.
Find the right person. Incentivise them like a partner, not an employee. Give them the space to operate and the accountability to deliver.
Everything else — the price, the deal structure, the industry — matters less than this one decision.
Get it right and the business will surprise you. Get it wrong and no amount of due diligence will save you.
If you're thinking about buying a business and want to talk through your operator strategy — or any part of the acquisition process — book a conversation. I'm happy to share what I've learned, including the mistakes.
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