You buy a business.
Ice delivery. Strong cash flow (~$850k).
Great. Then, on Day 1 of ownership you discover that the seller was running the business from the cab of the truck because he was doing deliveries all day himself.
Uh-oh...
"I'm an investor looking to purchase small businesses. Have you considered the valuation of your business, and are you open to a conversation around that valuation?"
George Vallone used this messaging in his cold outreach to 400 biz owners, and got 75-100 conversations from it
How big a business should you buy?
@jdklein33
has thoughts. He was in the "buy small" camp when he bought his business for $100k.
Having learned the hard way, he now calls sub-$1M service businesses "death zone businesses."
Here's why:
Just came back from 2 weeks in Chile, obsessed with an SMB idea that we found.
Think of it like...
WeWork for Daycare
(minus the megalo founder)
So the place is called LaCasaJuego, and you drop off your kid on an as-needed basis, pay hourly.
Use cases:
When buying a business, my fav argument for "buying small" is:
Gets you in the game.
In many Acquiring Minds interviews, guests who bought small found that doors quickly opened once they became owners.
Primarily because?
2 types of Acquiring Minds guests:
1. Operations chops, no M&A experience
2. M&A experience, no operations chops
Type 1 envious of type 2 and vice versa.
(This week's guest
@signthefronts
was type 1.)
For a first SMB acquisition, which type has the more valuable experience?
Today SIG published their study on self-funded search.
Meant as an answer to the Stanford Study on the traditional search fund side.
Some much-needed visibility into self-funded search — which is most searchers after all.
Fascinating data.
A few favorite findings:
@MattBidstrup
@ShaanVP
Need more info, but yes potentially.
Many of these boomer business owners sell in the open market because the kid doesn't want the biz.
So kid is in best position to buy — the seller's first choice.
So yeah, as son, you might be first-in-line to an amazing off-market deal.
What the searcher wants:
Buy a business that operates without you
But what if you did that AND the biz was across the country?
...AND it was your first SMB acquisition??
@chrisxmunn
did it.
What he acquired & the numbers 👇
@awilkinson
God is the glue.
A secular church by definition lacks the moral piece — but this piece isn't merely a detail, or inconvenience.
It's what makes the whole thing hang together.
Going to church is a "should" for many. They wouldn't go if they didn't feel they should.
Interview with
@LumberyardDamon
dropped today 👉 Acquiring Minds in your podcast player.
Damon had 3 criteria for his search:
1) B2B
2) remote
3) scalable
He found all 3 in an insulation supplier. (Love these criteria myself.)
3 fav takeaways from my convo with Damon 👇
Her experience would be an asset, not a liability.
7 years of experience in 1 year of operating.
Also, this is an ecosystem that understands the risk involved in buying a small business.
Meanwhile, she also happens to be a sharp, hungry woman of action.
So, my question...
Independent Sponsor
Why is this model not more talked about in the search community?
(Or have I been living under a rock?)
Seems to offer what anybody fantasizing about a holdco really wants:
Own lots of businesses
You aren't the operator
Scale
What aren't more ppl doing it?
If you had to guess...
Among successful self-funded searchers, how many found their deal from:
a) proprietary outreach
b) a broker
c) professional network
@LiveOakBank
just surveyed 49 self-funded searcher-CEOs about their search and got an answer to this question
👇👇
I love how boring businesses have boring levers.
James Bloom bought a small mechanical HVAC contractor.
Doing about $3m, $785k purchase price.
4 years later, it's on track to do $25m.
How?
Providing great service, mostly.
Clients beg/demand that he bid on all their jobs.
self-funded search VS. traditional search funds
I'm hosting a debate about the relative merits.
Debaters are Greg Geronemus & Robert Graham. Going to be a live Acquiring Minds episode.
Searchers, if you've debated this in your own mind...
What should I ask?
Anyone needing to hair the dog that was
@SMB_ash
, check out the latest episode of Acquiring Minds.
As a PE analyst
@Adrian_Pinto2
saw these guys who built 9-figure blue collar empires and said to himself:
Why not me?
Fast forward. He's now the owner of a...
Judd Lorson bought a business that looked great:
$2m EBITDA
Recurring rev
His investors liked it
But it didn't take long to learn he'd acquired a lemon.
This isn't an SMB acquisition story that ends in $$ and glory, but a harrowing tale of survival.
link to interview in bio☝️
SMB owners of Twitter:
How would you look upon a former searcher who lost the business?
What do her prospects for getting a job as an operator look like?
Female searchers, I hope you'll check out today's episode of Acquiring Minds.
I handed the mic to Chelsea Wood to moderate a panel with 3 female searchers.
Each bought a business in the last 2 years.
Chelsea's vision for this panel was simple:
Why should white guys have all the fun?
I almost used that as the title of today's episode, in homage to the book of the same name.
But instead I went with:
The Life-Changing Potential of Buying a Business
Because that potential is real.
Yes, I've published...
This week's episode -
$2.25m EBITDA roofing business as a self-funded searcher?
Sure, if rare.
The 2.25 grows to $3m EBITDA by the end of due diligence; seller doesn't increase purchase price.
Rarer still.
And rarest/best of all:
Biz was sitting right there on BizBuySell.
Lots of speculation about SMB multiples declining.
Ecommerce is already cooling.
Multiples have slipped from 2021 mania.
Ecom owners are fatigued from supply chain & COVID roller coaster.
Aggregators are pulling back, retrenching.
What are you seeing
@BillDA
,
@kelceylehrich
?
I'll hear it said that people who buy small businesses all have MBAs or come from PE, IB, or other finance-y backgrounds.
Hopefully the countless guests on Acquiring Minds without such backgrounds prove otherwise.
Case in point:
@HeatherSH22
was an academic...
If you've followed
@Fundof1
and are curious about his journey to acquisition, he's my guest on the pod this week! Some themes:
* buying solo vs. w/investors
* the appeal of appliance repair
* BizBuySell
* why paying a bit extra can make sense
* $$ numbers behind his deal
@BrandonPAdams
It's an awesome story of scrappy SMB life.
Check out the full episode:
"6 Months in the Truck: Buying an Ice Delivery Biz"
Under the Acquiring Minds podcast in your favorite pod player. (Also, link in bio.)
And give this delivery guy a follow 👉
@BrandonPAdams
Published the 100th episode of Acquiring Minds this week.
Honestly, it snuck up on me — testament to how much I enjoy my interviews, and building a media brand in general.
Thank you for listening 🙏
3 questions I'm asking myself for the next 100 episodes:
My takeaway from today's interview:
How quickly someone can transform their life when they buy a business.
In 2 years,
@bibelhausen
:
* Raised $800k from investors that he did not already know...
* To buy a business valued at almost $8 million...
and...
Thinking about hosting a panel with people who bought businesses in the trades and have a goal to get to $100m in revenue. Would be fun to bring in someone who's already done it to provide feedback on their plans. Who's built a $100m business in the trades?
Franchises.
Most searchers don't want to buy one... at least when they first start.
But some of you eventually open up to it.
Today's interview is a perfect example.
Doug Johns didn't want a franchise, but a Mr. Rooter doing $1.8m EBITDA changed his mind.
(Link in bio.)
Searchers complain about biz brokers.
Ever wonder how brokers see searchers?
If you get your dealings with brokers right, things can go well for you.
If not, you'll wonder why they never respond.
Finally got
@ClintFiore
in the hot seat to break it down for me.
3 quick favs:
One of my favorite things about search:
So many businesses hiding in plain sight.
Like... stage curtains.
Bruce Vann searched all over the US and ultimately found a business that makes stage curtains.
It's a growing business, and he acquired it for...2x. 💥👏
👇
When you hear "online" or "digital" business, you probably think ecommerce, SaaS, maybe content & affiliate websites.
Well there's another category that gets overlooked:
@imrishit98
@ShaanVP
Some key characteristics, always hard to find ALL of these in a deal though:
* Business has age (9+ years)
* Business is generating EBITDA of $500k or more (lots of nuance to this)
* Recurring or re-occurring revenue
* Seller/company culture has character
@RegZeller
Reg I'm surprised by how different our reactions are.
I hear a person being self-reflective & even self-critical throughout the vast majority of the interview.
She sees the deluge of issues and acknowledges that she might be the source of the problem.
She is reluctant to lay
Now I know what the SMB owner feels like when they get a bad Google review for a trivial reason.
But since we're on the topic, am I pronouncing EBITDA wrong???
Thinking about buying a business and curious about which industry?
Latest episode of the pod has Casey Clark, CEO of Cultivate Advisors, talking about exactly this.
Casey named 3:
Mike Loftus is my first guest who founded his company, a landscaping biz.
He discovered acquisition around the $1m/yr mark & has since acquired his way to $4m.
* 3 acquisitions
* Each one $500-800k rev
* Now he's doing $600-700k EBITDA
Would he found-then-acquire over again?
And if this path is powerful for us, I daresay it's even more so for those less represented.
At least
@chrisxmunn
&
@ElliottEHolland
seem to think so, 2 of the guys in today's episode.
There is so much opportunity here.
A big pie to share & grow.
Here's to spreading the fun!
Easy to be bummed by our mess here in 🇺🇸
So my interview with Kinza Azmat got me.
Arrived at 6 years old, speaking little English.
Scared. Overwhelmed.
But worked her tail off for 25 years.
Now?
She buys a real estate business with 200+ people. She's 31.
This clip though:
This week's guest on Acquiring Minds got more responses from business brokers when he started referring to himself as "independent investor" rather than what he had been saying, "searcher".
Should searchers refer to themselves as "independent investors"
@ClintFiore
@morgantate_
?
Proprietary outreach: yes or no?
Well if you want to buy a business in a certain industry, and the industry brokers won't talk to you.... it's not really a choice.
This is what happened to
@patrickdichter
.
Patrick wanted to buy a...
ATMs.
Seem an unlikely place to build a business?
Well,
@mitchell_sorkin
:
* bought his first 3 ATMs in 2021
* has 140 machines today
* is approaching high 7 figs in revenue (with great margins)
* sees a path to $5m EBITDA... maybe even 10
Today on the pod.
* Moved to North Carolina to take over the business...
* Is now owner & president of this 20-year-old wholesale fabrics business that does almost $10 million a year in sales...
* And is the GP in a fund to invest in search deals himself.
Not bad for 2 years' work.
What I love about today's episode of
@AcquiringMinds_
is the intersection of "make money online" and SMB acquisition. Story time!
@Gundwolf
hated the 9-to-5.
So he decided to figure out how to make money online. (Heard that before.)
Yeah but this guy was committed.
Today's episode is super fun & interesting.
This acquisition story is between 2 previous guests of Acquiring Minds, guests who actually connected via the podcast:
@MikeBotkin_
&
@Adrian_Pinto2
A teaser:
Buy-side advisors.
Didn't know much about them except they're expensive.
After my interview with
@Jandrews707
, I'm intrigued.
Expensive, yes - $250k!
But they found Jason a high 7-figure business.
...within 45 minutes of his home.
...while he kept his day job.
Not bad.
Easy to get discouraged searching for a business to buy.
What happens?
You loosen your criteria, lower your standards.
You'll probably have to do this somewhat; the perfect business doesn't exist.
But beware doing it with respect to SIZE.
Searcher
@SMBQuest
explains why 👇
Fans of the My First Million podcast:
You may have heard Shaan & Sam mention their buddy Ramon.
He's the guy who's sold many millions of $$ of... dog ramps!
Turns out, Ramon actually BOUGHT that dog ramp business, THEN grew it like crazy...
Since 2015:
* 7 platform companies acquired
* 450 employees
* ~30 total acquisitions (lots of tuck-ins)
Not bad for 7 years work.
I'm talking about Chenmark:
When you buy a business, you have to download the seller's brain into your own.
This week's guest
@signthefronts
negotiated a consulting agreement to keep the seller around longer.
Is there a best practice here in terms of structure (consulting agreement?) or time (6 mos)?
Upstairs is a workspace for the parents, with coffee/tea. So if I want to get work done while my kid plays downstairs, I just hop upstairs & do it. Don't have to go back home or to the nearest Starbucks.
So... could this work in the States?
Does it exist somewhere already?
3) The power of buying an existing business.
Even though what Neil & his wife bought was a lemon, and very small, it was a foundation. It was "starting on second base" to quote Neil.
Get in the truck yourself, of course. For 6 months!
This is the story of
@BrandonPAdams
, the latest Acquiring Minds guest.
And it was actually a blessing in disguise:
When I started in the search world waaaay back 12 months ago, Steve Ressler was the first investor name I learned. Excited to watch his next chapter unfold.
And selfishly... love seeing the DC search contingent grow!
It’s launch day and I’m excited to launch The Brydon Group with
@LeveredKnowledg
and George Dutile
Brydon invests in a select number of Entrepreneurs in Residence (EIRs) each year as well as minority stakes in traditional search
A quick 🧵 on Brydon & our approach to search:
Lots of listener interest in buying an established franchise business.
So I've been doing more such stories on
@AcquiringMinds_
AND, just had on
@franchisewolf
to go deep on the subject.
Result?
A primer on buying franchises for searchers.
Awesome breakdown ~ thank you sir!
One of the most painful parts of being a founder, is begging for intros or cold-emailing into the abyss trying to get in front of investors
Especially if you're an outsider or first time investor.
A few months ago, my buddy
@julian
had a great idea on how to fix that.
For SMB searchers new to online business models, I interviewed Dom Wells on:
The state of digital business acquisition in 2022
5 takeaways:
1. how to search
2. pros/cons of business models
3. buy a SaaS?
4. key weakness of digital
5. how to get in the game (for $5k)
🧵👇
@BrandonPAdams
1) It showed his new employees that Brandon & his partner weren't afraid of rolling up their sleeves & doing hard work.
2) They set a new bar by doing the job even better than the other drivers.
3) And they identified issues in the business that they could then fix.
That other women might see themselves in these 3 entrepreneurs and feel emboldened to follow suit.
The result was a lively & rich conversation — for anyone, women and men alike.
Also timely given last week's tweets by
@ClintFiore
,
@EndresenHeather
, and
@Whitney_Sheph
.
Owner vs. CEO
It's a good framework to understand buying a business as a self-funded searcher vs. as a traditional search fund.
Agree?
This week's interview with
@AZ_SMB
explores it.
Derek has done both.
And he shares how the 2 styles of buying a business FEELS different.
If you missed it, watch the self-funded search vs. traditional search funds debate here 👇
This was a live recording of Acquiring Minds.
Covered a TON of ground on this important question.
You can wait for the pod, or watch on YouTube now:
@Whitney_Sheph
@EndresenHeather
Timely.
This coming Monday's episode of
@AcquiringMinds_
is a panel with 3 women searchers. Tune in!
Moderator:
Chelsea Wood of the Acquisition Lab
Panelists:
Anne Ristic
Morli Desai
Cassi Niekamp
@SMB_ash
@Adrian_Pinto2
@Adrian_Pinto2
's a strong communicator.
Something tells me I'll see him on stage at a future
@SMB_ash
.
Find the episode in your favorite podcast player:
"Building a Blue Collar Empire"
.
@AlexGlasner
interviewed 50 people before starting his search.
He made sure to talk to people who had NOT acquired a business after searching.
Sure enough, it was them that he learned from most.
Namely, the 2 reasons he saw that searchers DON'T close:
@JustinNicholasT
My favorite quote from Justin:
"I think most people underestimate themselves, and don't think big enough on what they can accomplish."
(Context was buying big vs. buying small)
some horror stories lately.
It's crucial to be real about the risks in buying a business.
But after 150+ interviews with buyers of businesses, I remain dazzled by the possibilities of this path of entrepreneurship.
The majority of buyers are white guys like me...
"Just add marketing."
Business brokers are notorious for saying a business just needs X to go to the moon.
Marketing is a common one. Like this:
"This business is poised for 🚀 growth. Today all sales are word of mouth. Owners never advertise. Just add marketing!"
Thing is...
@guessworkinvest
Airtable's big insight was that people use Excel as a quick & dirty database. So it made a product from the ground up that blends database & spreadsheet functionality naturally, rather than people shoehorning their databases into Excel.
It's a database with spreadsheet features.
Knife's edge.
No guest on Acquiring Minds has ever said this as plainly as
@signthefronts
did in this week's episode:
If you buy a blue collar biz, often your employees' financial life is precarious.
Like, knife's edge.
Powerful reminder for white collar types among us 👇
1) Other owners reached out wanting to sell
2) Brokers sent them more deals, now seeing them as serious buyers
Latest episode of
@AcquiringMinds_
is a perfect example.
@n8lenahan
& his 2 partners bought small:
$400k for a $1.2m HVAC business.
Few weeks later...
The tweet below makes a big claim.
Today's guest on the pod saw it and was like, yeah right.
But it did pique his interest..
He figured, lemme just peek at BizBuySell in my area.
And down the rabbit hole he fell.
6 short months later, he was the owner of a $2m/yr business.
Year 1 - $350k (2x revenue in the first year of ownership!)
Year 2 - $525k
Year 3 - $505k (downtown construction project blocks foot traffic)
Year 4 - $620k
Year 5 - $725k
Year 6 - Almost $900k
Except year 3, it's all up & to the right!
@GoodsCapital
@JustinNicholasT
Guest on an upcoming episode interviewed 50 people when he started searching.
The ones who searched but never bought a business surfaced one of the best takeaways:
They were too picky.
EBITDA was $100k less than they wanted. Or recurring rev was 60% instead of 80%. Etc.
@JustinNicholasT
And the businesses bought in 2018 and 2019 have grown 60% and 86%, respectively, since acquisition.
Justin is this week's guest on the Acquiring Minds podcast.
Find it wherever you listen to pods.
@BillDA
This needs to be said more.
I sometimes wonder if this realization could be the antidote to our polarization.
If people — both right and left — thought more about what a good thing we got, maybe they’d be less reckless about tearing it up.
@SullyBusiness
I wonder the same. And I thought the appeal of podcasts was that you could listen while doing something else.
That said! I will of course be putting my pod on YouTube imminently. 🤷
Neil makes 2 critical tweaks to their office expansion playbook:
1) Enlists the help of a tenant-only broker. They negotiate office leases on his behalf and, most importantly, find office space with landlords that need to fill it quickly and will therefore cut deals.
Talk about a great example of Buy Then Build.
I was thrilled that Ramon came on Acquiring Minds to tell his story.
If you are interested in buying an ecommerce business, you have to hear how
@ramonvanmeer
has done it.
Episode 89!