I agree with the core point here because reducing early risk matters a lot at $500k SDE. However, where these discussions tend to oversimplify is treating equity-only as the default or end state. In practice, most aligned long-term partners are open to hybrid structures or leverage, either pre-close or post-close, when they’re underwriting durable cash flow and a broader platform vision. Pure equity can make sense early, but it’s rarely the optimal structure for the full purchase or lifecycle of the business. Capital outcomes are usually driven by structure and sequencing, not ideology.

Businesses fail because they run out of cash or the owner quits. That's it. The risk of running out of cash increases greatly if you buy all cash and have none left. E.g. 2MM in cash can finance a 2MM SBA loan for 6!!! years assuming the business breaks even over that period. That's a long time. Short term volatitlity can kill many biz (cash flow issues and run out of money). In terms of safety, the 2MM loan with 2MM cash in the bank/investments is way safer IMO than the fully owned business.