Having a mindset of abundance will unlock more connections and conversations than anything else.
Case in point: In 12 months, the Denver ETA group has grown from zero... to 600.
Giving, sharing, learning.
Throughout this last year:
We've had 12 events. The first had less
"Buy a business for what it is, not what it could be."
I get asked all the time how I value a business.
The most common question: "What multiple do you use?"
Me: "None, specifically."
Not all businesses making $4,000,000 of revenues and a 15% profit margin are the same. There
Small business ownership, they said.
It’ll be great, they said.
Freedom and control, they said.
Somehow ‘car-going-through-the-front-door’ was not on the list of benefits.
Fun day at one of our companies…
Alternative theory? Our customers can’t get enough of our flagpoles.
Buying a business is hard. Compared to running a business, it’s relatively easy.
The search process, the funding, all of that is fairly well mapped out. And plenty of resources exist to help tactically. Even just the communities that exist in-person or here on Twitter.
I know
Can confirm… both legends and degenerates met over the past few days.
In reality, from searchers to operators and beyond, a great group with and incredible future ahead. Regardless of your experience or level, always something to learn.
@SMB_ash
was certainty worth the trip.
Looking forward to meeting some of you legends and degenerates at
@SMB_ash
this week.
What has smb twitter gotten me into?
Respond or DM if you’ll be there, would love to connect.
@SMB_Attorney
Fee only fiduciary. CFP preferred. Understands and focuses on the holistic plan, with zero backend revenues from 'cross selling'.
I've got a killer referral here if anyone needs it. Finding a good one is hard.
Twitter is wild… connect to people, learn their stories, and be inspired (and maybe inspire along the way).
Endless opportunities to be exposed to new stuff.
For example, I never thought about dump trailers in my life… and here I am yesterday after a seller meeting for an
Signing day, again.
Adding our 8th company to the portfolio, a sister company to an existing holding of ours.
Great people, great brand.
Really excited for this one.
@AllyTaft
@skylarromines
Never good to be the recycled profile. 🤦♂️
I’m sure you’re right… people get on the bus and just can’t find a way off.
Those who aren’t part of the top 10/20% of either side… probably not having a great time.
Zipping over to California as we close on another deal, backing one of our Denver ETA members.
Excited for this one.
Life defining for the searcher who put in a huge amount of time, and has real and relevant experience and a deep background in this space.
A 2.4x DSCR
After a wild summer of deals… been enjoying time while weaving through Europe.
Some business mixed with pleasure in London.
A wedding in the Netherlands - love to see how others celebrate!
And now relaxing in Lisbon, Portugal.
Make sure what you’re grinding for has an
@AllyTaft
@skylarromines
Dopamine is a powerful drug. Even more so when it’s in the palm of your hand and a swipe away.
Add in some gamification… got’em hook, line, and sinker.
Ugh. Yes. I look at 10-20 deals per month for searchers.
This is nearly universally a problem.
Preflighted deal by bank… $60k of working capital? 🙄
Nah fam. It’s $500k. Do the math!
Just spent an hr w a searcher about to close. We walked thru a 26 wk cash flow model. “Oh so I’m going to burn thru 400-500k? And this assumes customers pay on time? Why aren’t the lenders or my cpa warning me abt this?” “Have any of them run a biz before?” Pause. “Right”
New episode!
- Getting Reps: Helping Others Look at Deals Led to a Holdco -
How Adam Markley evaluated thousands of businesses for sale and bought a handful of his own (6 in his portfolio today).
It’s a good day when you’ve put your
@AcquiringMinds_
podcast in the can with
@whentheresawill
!
Can’t wait to see how it comes together.
There is just so much to talk about in the acquisition space. Don’t get me started… I could wax on for hours.
What's the value of time when acquiring a business? An intense discussion at a Denver meetup got me thinking. Is it worth two years and $200,000 for an executive MBA at a top-tier school, or building a local network?
Time is finite. Would you achieve more by skipping school and
@blueprintsmb22
Ugh. Yes. I look at 10-20 deals per month for searchers.
This is nearly universally a problem.
Preflighted deal by bank… $60k of working capital? 🙄
Nah fam. It’s $500k. Do the math!
Revenue solves all problems… I've heard this. Said this. And, repeated it.
It's true. But, growth is f*cking expensive.
I've looked at thousands of companies in the last several years... for myself as potential acquisition targets, for those looking to buy their first or add
Looking forward to meeting some of you legends and degenerates at
@SMB_ash
this week.
What has smb twitter gotten me into?
Respond or DM if you’ll be there, would love to connect.
10, 25, 40%? It's hard to say, but the odds keep stacking up. The odds of what, you say? Self-funded operators who have bought a business and who get kicked in the teeth by a lack of working capital post-close.
@privateinequity
And both suck…
A CPA doesn’t mean you’re good at real world application of accounting. You just rock at memorizing rules while losing creativity.
CFA isn’t much different.
Signed, reformed bean counter who didn’t want to be pigeonholed.
The strain of business ownership is real, with challenges faced day in and day out.
If you aren’t taking care of yourself, who will?
The older I’ve gotten, the more emphasis I’ve put on my health, and regretted the years I didn’t.
Part of why I moved to Colorado was access
The entrepreneurial journey doesn't have to be lonely; it can be enriched by community. Whether you're a searcher, post-acquisition operator, investor, or part of the supporting network, there's a place for you. Let's plug in together and walk this path side by side.
Rock and roll, Denver.
The ETA and acquisition community here is incredible. Last night, another 65+ doing what we do best.
Creating relationships, sharing experiences, and being in the right room.
Find your people, it’ll make this journey all the sweeter.
@ElliottEHolland
If the deal is still closing, politely make the lender/broker/etc. aware of the issue. They might be concerned about the collectibility of any deferred consideration.
Otherwise, hard to have leverage in the world of intangibles. But they’ve permanently lost an option for deal
Every damn year. EVERY year. 👀
Reviewing a target company for a friend in the acquisition space...
And what do you know, EVERY year has six-figures of 'one-time expenses'
If you have 'one-time' expenses every year - they're not one-time. It's just a consistent level of
@patrickdichter
I’ve put this in several of my acquisition LOIs. And have gotten it signed.
And, in one case, was required to collect it.
Three weeks before closing a $4m deal, the sellers counsel demanded a material change to the PGs - a shift of $2m. We didn’t agree, they walked away. We
At the end of May, I had the distinct pleasure to record the journey of PROX Capital Group with
@whentheresawill
of
@AcquiringMinds_
.
Ever since I was a little kid, negotiating has been in my blood.
Just ask my mom about potty training and three-year-old me asking "What do I
One of the biggest errors I see post-acquisition in the SMB space:
If you've never managed a leveraged company's cash flows and you think they'll look and feel anything like what you saw in due diligence.
$1MM of earnings can quickly become free cash flow of $250k.
Chicken or the f*cking egg… Growth is hard... like, really hard.
For one company, it comes down to systems, processes, people, and shared accountability and vision.
But what about a holding company?
PROX Capital Group is a bit unique. Born out of humble roots, effectively
Love visiting our portfolio companies…
This is our heavy truck transmission and differential rebuild facility based out of South Baltimore.
Dirty business is good business.
I used to work for one of the largest direct-response publishing companies in the United States. They sold countless financial newsletters to help subscribers invest in ways to expand their income or gains.
@ClintFiore
1) I’ve got a portfolio of businesses, but especially am focused on our digital marketing and fractional CFO companies.
2) I’ve been in the acquisition game for a well, reviewed thousands of deals and advised on hundreds. Love helping anyone in the process of reviewing and
@ClintFiore
Denver, CO based SMB investor and ETA community builder. Building majority and minority stake portfolios.
Love all things SMB, deal reviews, fractional support, connecting the right people to the right people.
Also an active board member, and open to more.
It’s Official!
We have our first Denver ETA meetup attendee to find, negotiate, and close on an acquisition since attending our events.
$1.5m towing company acquisition
The power of local community is powerful. Been amazing to have a front row seat on the deal.
🧵
"You're right where you need to be."
For most of my life, especially when I was younger, I had immense insecurities.
In every phase of school growing up, this caused me to do... well stupid shit. I couldn't regulate my emotions, couldn't regulate my behavior, and I found fault
Community is incredibly important, and Denver is showing out.
Our last meetup had its first-panel session with Craig McNally, Duncan M. Hutchins, and Jay Velasco—three searchers on different paths to success.
As the Denver ETA community grows (over 400 now), we’ll explore all
@honest_math
@privateinequity
@InvestingandC
For those in the back still not listening…
A primary residence is not an investment. You’re not making ROI calcs when you buy it. So stop equating it to one down the road.
Rent, have a mortgage, or paid off, whichever. But it won’t be the asset that makes you fucking rich.
@privateinequity
Bean counters matter.
If you aren’t one, find good ones and hire/contract quickly.
Best accidental decision I made was going from engineering to accounting. Then buying company’s a decade later.
Huge leverage with that skillset on the team.
@Will_Schryver
It’s an incredible difference maker that can really impact how you perceive value.
Add in that most “accrual” books aren’t true accrual, and you’ll want to dive into invoicing policies and timing, collections cycles, etc.
@carkerpox
Lifetime value? Always revenue.
Net income isn’t even tied to a customer and has so many indirect elements.
Gross margin can be, but that’s a customer profitability measurement.
@SMB_Attorney
Deals done reflect supply, not demand.
And while the supply hasn’t materially increased, as someone who has been in the SMB acquisition space for years… it’s different on the ground.
You weren’t seeing 9-full priced offers on a $1.5m unexciting deal 5-years ago.
Good books and financial insights.
Unoriginal and boring, but a fundamental building block to business.
Having reviewed roughly 4,000 business financials in the last several years... I can tell you this:
The bell curve of success comes from knowing where the business has been
Smart, hungry, and curious individuals. That's who you’ll meet at the next Denver Entrepreneurship through Acquisition (ETA) event. If you're in the Denver area, we get together once per month. Check out the meetup group and schedule listed in my bio.
There’s no place like home… And in this case, being surrounded by an incredible group of people.
Wanting more.
For them, their families, and beyond.
Each with their own ‘why’.
The Denver ETA group continues to grow!
“What can business buying do/accomplish in my life.”
@Will_Schryver
504 loans tend to be much lower - can be in the 6.5-7.5% range.
7a loans are ranging from prime (8.5%) up to what you’ve listed at P+2.5%
Some banks pushing hard on the relationship side can do fixed rate periods, lower rates, etc.
@blueprintsmb22
Run the race with both legs…
If you’re not chasing on and off market deals, someone is running faster and failing faster.
Closed another deal this week. This one on-market. Last month’s close was a no-broker, on-market.
Both sub-4x of SDE. Both with seller notes. Both with
@blueprintsmb22
@patrickdichter
High variable costs for sure… until you add a +$50k/mo debt payment. That’s a fixed cash flow item the business didn’t have before.
@CBarrett_CPA
I’ve seen it!
3X multiple acquisition
50% FULL standby seller note
10% equity injection
40% SBA 7(a) loan
Incredible deal, no? Great DSCR.
Ran out of money in 45-days.
Survived due to a well funded wife.
Working capital IS survivability.
Emotions have to be controlled in the dealmaking process.
Don’t make a multi-million dollar mistake because you’re $30/50/100k into DD and closing costs.
It’s a sunk cost. Money is spent regardless. And a hell of a lot cheaper than the bad decision.
Recognizing that our
Three buckets of cash that matter when buying a business and sellers don't always think about them:
✅ Debt Service seems like a given, but you'd be amazed at how this is not conveyed correctly. The biggest new cash flow item for any acquirer post-acquisition that is leveraging
@MySBAPro
@ClintFiore
Is this mostly B2B? Working capital feels skinny doing construction work if nothing is included as part of the deal.
Otherwise, I’d say you two have lined things up nicely.
🫡
See you in SLC tomorrow, Clint.
@iotjosh
@SMB_Attorney
Bookkeeping - immediately
Fractional CFO - $1-2MM of revenues is where I’d start.
Can do project based work before and after for more strategic involvement.
Underinvesting in the back office can have huge consequences.
@SMB_Attorney
We’re on the same page! I am one of the investors!
As a searcher, if you don’t have that capital lined up before making a move… you are at a disadvantage in this environment.
Any perceived uncertainty in the capital stack against 3, 6, or 8 other offers will get you out of
@STLChrisH
Not all 5-year CPAs are the same… needs to be way more qualified than that.
Worked on audit at Big4? No, thank you.
Worked on small businesses at a regional or local firm? Yes, please.
Small business is scrappy, and needs folks who understand that scale.
@ChandlerReedSMB
@adamislucky
@SBA_Matthias
On the surface, it’s a fascinating take from a guy charging for in-person courses with a massive promise of success and, I would presume, opportunistically investing in deals beyond that?
I can feel the response before I even post this… “we’re different than the other guys”
Like grandma's kiss on the cheek, it can only happen in person. Yet today's world revolves around technology, remote work, and video calls. In small business acquisitions, face-to-face meetings are the ones that actually create relationships.
@jeffdriskel
@SBA_Matthias
@brandonadixon
@wshaw_9
My unsolicited take… I’d go the significant minority investor route.
“Build your own family office” if you will.
Avoid the recourse, diversify the number of deals, gain access to the asset class.
Plus, leverage your reputation/door opening to secure better equity terms.
@tsludwig
Exactly why we model the way we do, and push for 2X DSCR.
And as we advise other buyers l, prepare projections, etc., and clients of our fCFO biz… assume worse than anticipated.
It’s not if something goes sideways that kills margin, but when.
Awesome to have co-hosted Baltimore with
@RandBusiness
, and rocking another together.
These are great points, and especially the “nothing is what it seems”
Overall, in real life relationships matter. Small business especially.
It’s why we’re 200+ strong in our Denver meetup,
We just wrapped up the Boston SMB meetup!!
Here are 12 observations I’ve had from doing 6 of these events in the past 2 weeks:
—
1. Bullshit conversations are more fun than business conversations
I love biz talk, but when someone is obsessed with their exercise routine or
@blueprintsmb22
@petercnordberg
The search… while not easy, is incredibly simple in comparison to actually operating a company.
See this misunderstood time and time again in the acquisition space.
The math ain't mathing!
Like walking through the twilight zone.
Over the last couple of months I’ve been working with a few folks on acquisitions, and in each case, working capital has become an issue at different levels.
The most egregious…
A company with north of $7MM in
To partner, or not to partner, that is some kind of a question. 🤷♂️
Honestly, it comes up a lot for those wanting to acquire a business. Throughout the ETA space and in the corners of the
online coaching world for business buying, it is a point of divide.
@kevinjm
Keep him, treat him well, learn some Spanish (effort counts), and he'll bring friends when you need them.
One of my businesses, our top two guys are Spanish speaking brothers and do 50% more output than anyone.
Good people are good people, no matter the other characteristics.
@MatznerJon
@privateinequity
It’s buying a more expensive $2 lottery ticket (which gives you the 30-minute fantasy of ‘what-if’)
Courses and coaching allows for “perceived proximity” to curated heroes.
The combination of fantasy and celebrity is endlessly intoxicating for those seeking a dream.
Having advisors is crucial. It’s hard sometimes to look past the cost of an advisor or board in order to recognize the value they provide. Gets you out of your echo chamber.
My favorite quote from one owner I advise, “I don’t know when you’ll save me or make me a million
@MarkMagaro
@ElliottEHolland
@ConnorAbene
@BoilerPlateCPA
@SBA_Matthias
Oh man. Ohhh man.
We just found hundreds of thousands of negative EV adjustments in the last QoE we did.
Fortunately ours is basically in-house (we own a firm), but man… would never consider not doing the right level of financial due diligence.
Making an impact in someone else’s life is so valuable. And I feel privileged each time.
Connected with a searcher on LinkedIn who heard my
@AcquiringMinds_
podcast. Had a bank return a lower valuation, needed to retrade, and felt like he needed to bridge some of the gap with
@drew_eckman
@bentigg
Absolutely - the key is to make it a little less competitive. By only working with on-market, you’re putting yourself into super competitive situations (the wrong tires).
Take those same company profiles, and develop some off-market lead flow leveraging LinkedIn, snail mail,
@SMBJackieHirsch
You are sadly an exception to the rule. It is wild to me that there is an expectation of an offer or LOI without such crucial information.
Valuation = success in underwriting
Working Capital = success in ownership
One is not equal to the other.
@Laura_W_Gieseke
@Eli_Albrecht
@investing_law
It's why when I bought a digital marketing agency that specialized in organic and paid social... most of the staff were Gen Z.
Lifesaver. And they aren't shy about letting me know I've been ignoring their oh-so-candid feedback. 😅
@sam_allsopp_
@WadeCoons
Jumping in here for Chase Premier as well.
With high volumes, it makes sense. 2-2.5% cash back. We don’t have high corporate travel.
Tens of thousands in cash back, no limit.
@CLouvi
@joebensonx
Nope… 6-hours or less, drive.
Any more? Flying typically is the better option.
Other factors like proximity of the airport to you and your final destination matter, direct versus connecting flights, etc.
@ChandlerReedSMB
We closed an off-market deal for a 0.3X TTM multiple in less than 3-months, start to finish.
👀🫡
Meanwhile, I’ve closed broker deals where the seller is suing the broker for misrepresentation.
Better solution: Run the race with two legs, and do on- and off-market searching.
@Eli_Albrecht
@SMB_Attorney
Failing fast and finding you ‘no’ quickly are two of the most valued searching skills.
Saves time upfront, lessons damage to financing or investor relationships, and ensures you’re stacking the deck in your favor for the real shots on goal.
The advice I give everyone I help.
@blueprintsmb22
Lots of rosy assumptions if we’re out here talking terminal multiple pre-acq.
How about figure out how to buy, and more importantly, operate a business.
Exits will take care of themselves if you master these two steps.
Little bit of art, some science... and happens to be one of the largest risk variables in most deals.
Working-f*cking-capital.
In a wild twist of events, the small business acquisition space has created a paradox of a fundamental business component.
Whether an asset sale or
Part of why I’m so focused on building the ETA community here in Denver the way I am.
Surround yourself (and others) with people who have blazed the trail, and those learning along the way.
Be inspired and inspire others. It’s the path to growth and humility.
@SMB_Attorney
One of our companies is a fCFO/accounting provider.
Our “accidental business” - we built it for ourselves to support our own portfolio.
Turns out… being owners, operators, and acquirers with high demands and financial experience means we know what’s needed in SMB.
Who knew 🤷♂️
@Eli_Albrecht
Real rule of thumb…
Don’t make offers on CIMs only. Anyone expecting this is doing a disservice to the deal process.
For me, it’s an automatic walk away if a broker won’t provide real financials prior to expecting offers/LOIs.
Doesn’t mean purchase price adjustments won’t
@Mikethelummox
I’ve bought a family owned business… 3rd gen selling, 4th gen not able to run the company.
Outside of the worst attorney I’ve dealt with, the deal was straightforward.
Small closing payment, rest seller financed. Even with a broker.
Sometimes the right fit, is just that.
Why? Buying a business is hard. Owning one is harder. Doing the first part well doesn't ensure success in the latter, but definitely can prevent some of the challenges you'll face.
Spot on here
@ClintFiore
This past week at our Denver ETA meetup, we interviewed Mohammad…
A searcher who beat out 8 other full priced offers for a deal and closed this past April.
Not because he was the savviest, but because the sellers saw him as someone they could work
SMB Buyers, let's have a little fireside chat about your mindset and your ego. 🔥
Sophisticated Buyers with MBAs and whatnot, which I know are many of you, are indeed "smarter" than most biz brokers, and most SMB Sellers.
This works against you in your search... 🧵
Three weeks, 15 conversations.
Since our last Denver Entrepreneurship Through Acquisition (ETA) meetup, I've had the opportunity to meet, chat with, or connect to 15 different people one-on-one.
Mostly face-to-face, and a couple of calls.
Some were first time meetings, and
@sbabmarks
is spot on… and hitting my broken record of late.
If you’re not factoring in working capital correctly, you will…
1) Not get funding
2) Run out of money post-acquisition, or
3) Reflect to your investors you’re not capable of managing leveraged cash flows.
Working capital is a MUST
If it is not included with the acquisition, you will need to buy it or finance it.
This will increase your purchase price multiple.
You can’t afford to be wrong!
Talk with other Searchers who can share value.
@sbabmarks
Perceived capability of closing. And I don’t agree with it, but understand the why.
Brokers have been fighting tire kickers for years and years. Those who want… but can’t… close.
And the more people who are playing a shotgun approach, financial engineering game of “buy
@bentigg
Totally! If you can get past this objection, it’s a much easier acquisition than the first (typically).
As I said… introduces a very different scenario than first time buyers face. Both pros and cons to it.