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Ask Paul: Consequences of Skipping Due Diligence

Ask Paul: The Consequences of Skipping Due Diligence in Aircraft Purchases
A Costly Oversight in General Aviation
Marty Taubert, a seasoned marine professional who recently ventured into general aviation, is confronting the repercussions of bypassing a critical step in his aircraft purchase. Approximately 18 months ago, Taubert acquired a 1971 PA-32 Cherokee 260 but neglected to conduct a comprehensive pre-buy inspection. Despite his extensive experience in the marine industry, he underestimated the distinct risks associated with aircraft engines—risks that have now manifested with significant financial implications.
After accumulating 120 additional flight hours on an engine that had only 300 hours since its 2012 rebuild, Taubert’s annual inspection revealed alarming issues. Compression readings for the #1 and #2 cylinders were recorded at 10/80 due to exhaust valve problems. An oil analysis detected elevated nickel levels, and a borescope inspection uncovered excessive cam wear alongside surface rust on visible components. The aircraft, which had been stored intermittently in a New Jersey hangar, now faces a difficult choice: to remanufacture or replace the engine.
Supply Chain Challenges and Financial Decisions
Complicating the situation further are ongoing supply chain delays. Lycoming, the engine manufacturer, has quoted a waiting period of one to two years for a new engine. Taubert is currently deliberating whether to invest an additional $6,000 to $10,000 in a wide deck engine, which is newer and benefits from better support, or to rebuild the now-obsolete narrow deck model. He is also concerned about the potential impact on the aircraft’s value, especially since two of his four sons, both active pilots, frequently use the plane for recreational flying.
Paul McBride, an engines expert at General Aviation News, responded to Taubert’s predicament with candor. He acknowledged the oversight, stating, “I could begin by saying shame on you for not doing your due diligence in a pre-buy inspection. However, I’m sure that would be just adding insult to injury, and you’ve probably already beat yourself up over that decision enough.”
Broader Implications of Skipping Due Diligence
Taubert’s experience serves as a cautionary example that extends beyond aviation. Neglecting due diligence—whether in aircraft acquisitions, real estate transactions, or business ventures—can expose individuals and organizations to substantial financial risks, supply chain complications, and regulatory challenges. In the current market environment, investors and consumers are increasingly vigilant, often penalizing those who fail to conduct thorough evaluations. This can lead to elevated costs, reputational harm, and lost opportunities, while competitors who emphasize diligence may gain a strategic advantage.
The real estate sector illustrates a similar dynamic, with buyers more frequently withdrawing from deals after uncovering hidden defects during due diligence periods. This trend underscores the essential role that careful scrutiny plays in safeguarding investments.
For Taubert, the immediate challenge remains whether to rebuild or replace his Lycoming engine. Yet, the broader lesson is unmistakable: the enduring importance of due diligence. As McBride observes, Taubert is far from alone in learning this lesson the hard way, a reminder that in aviation and beyond, skipping essential inspections can have lasting and costly consequences.

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