🧐 What I Learned Last Week

Week ending Friday, October 22, 2021

What I Learned Last Week curates the most interesting content relating to business acquisitions, operations, entrepreneurship, finance, and more. WILLW is a publication of The Business Inquirer.

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Hello Friends!

If you have a deal that you passed on, please check Deal Flow Scout and see if it fits someone else’s criteria.

What I Learned Last Week is brought to you by DueDilio. DueDilio is the fastest growing platform connecting business buyers and private investors with quality, pre-vetted due diligence service providers. DueDilio clients include individuals, search funds, independent sponsors, private investors, and SMBs requiring diligence on deals that are < $25M in transaction value.


📰 Articles

GP Bullhound just released their 3Q21 sector insights where they discuss the trends they’re seeing in software, digital services, fintech, digital media, and marketplaces.

For software:

Jonathan Cantwell, Partner at GP Bullhound, said: “In Q3, ongoing remote work and significant global supply chain issues have cemented some of the SaaS industry trends we identified in previous reports. Out of these ongoing challenges in the global economy, several new trends have emerged, most notably in e-commerce/logistics, virtual recruitment, SaaS expense management, and document/file management. We see SaaS being core to finding efficient solutions to extremely complex problems, and there will be increasing investment into, and consolidation of, software companies in some of these newly prominent sectors of today’s economy.”

Key market insights into Software, Digital Services, Fintech, Digital Media and Marketplaces.

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Q&A style article discussing the hot M&A market and the issues that buyers and sellers need to keep in mind to close a successful deal. Among other questions, the article touches on the following:

  • What is your sense of the merger and acquisition market today? Which areas are hot and which are not?

  • What are the principal drivers of what is happening? What would you be looking for to cause a change in the current trend?

  • The current frenzy of activity may be enticing business owners to sell even if they are not ready. What advice would you give to owners who may be considering selling their businesses?

  • Similarly, what advice would you give buyers who may be looking to buy a company now?

  • How has the pandemic changed the way feasibility plans are being developed and how companies should be valued?

Market Frenzy: In a hot market, buyers and sellers must be careful not to make mistakes

(Source: I originally saw this article in the BizNexus newsletter)

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Law firm Barlow & Williams works with a lot of entrepreneurs, SMBs, and M&A participants. Their latest article is an interesting read for those outside of the US.

When Should You Form Your Company in the United States?

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As the founder of a B2B marketplace, this article by G2VP was helpful.

Over the past decade, a number of generational consumer-facing marketplaces have been built on the internet: Uber, Airbnb, Doordash. The wave of technologies that enabled these businesses (mobile, payments processing), and the tailwinds that drove exponential growth (adoption of e-commerce during COVID-19 lockdowns) have accelerated the growth of a number of B2B marketplace platforms as well. Amazon Business had $10B+ in sales in 2019, and Bank of America projects that it could generate $125–245B of EV for Amazon as a whole, even assuming a small fraction of share of the $1.4T market for B2B ecommerce.

In this post we explore how new entrants can build valuable businesses to capture this opportunity.

B2B marketplaces: capturing the $1T+ opportunity

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This article talks about hiring your first Account Executives. It specifically talks about SaaS but I think the points discussed are applicable across business models.

One of the biggest differences between B2B SaaS startups that scale fast and those that fall short of their full potential is… their ability to hire and retain top sales talent. In the early days of a startup, the first few sales hires make an enormous impact on the growth rate of revenue and in turn the growth of the company. If you make a bad hire for your first or second sales person it will not only slow growth but can kill the company. But I’m not telling you anything you don’t already know, so let’s get to it.

Hiring your (first) Account Executives

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For those interested in tech & crypto, Elad Gil published an interesting read on megacycles.

Every 8-10 years, the technology industry used to go through a boom and bust cycle. A new technology or platform would emerge, there would be rampant investment and speculation, a few strong hypergrowth survivors would emerge and most of the rest of the new startups would collapse or get consolidated. This happened with semiconductors in the 60s & 70s, microcomputers in the 80s, and the internet in the 90s. 

MegaCycles in Tech & Crypto


🧵 Twitter

Customer acquisition costs are going up. Keep this in mind when looking at past financial results in an acquisition…

Like it or don’t like it, the story matters…

My friends in e-commerce tell me that Google Shopping is bringing in significantly higher ROAS compared to other channels…

Paid GLG a lot of money in my asset management days. What a great business model…

Some good tips on implementing systems…

Crazy story. See the comment from Paul Graham…

Many people have recommended this book…

Thread outlining the troubles at one of the largest FBA aggregators…

Things not to do…

The reality is that there are many more of these types of stories that need to be talked about…

Off-topic but an interesting thread…


🤔 Thoughts & Commentary

DueDilio Business Update
This week I sent out a business update to members and past clients of DueDilio. I want to share parts of the update with you here…

Progress

I launched DueDilio to streamline the process of sourcing, pricing, and hiring quality pre-vetted due diligence service providers.  We now have 100+ due diligence service providers as part of our network including independent professionals, attorneys, CPAs, M&A advisors, boutique and mid-size firms, subject-matter-experts, and more.  We also have complementary partnerships and the ability to custom-source due diligence solutions.  Today, I (almost) struggle to think of a due diligence project that we would not be able to facilitate.

On April 5th, 2021 we saw the first due diligence project submitted through the website.  Since that time, we have facilitated 65+ requests for help with finance, technology, legal, operations, and other types of due diligence.  Today, we are consistently seeing 3 to 5 new projects per week submitted through our website.  Our clients have included searchers, independent sponsors, family offices, private investors, and SMBs.  The typical transaction value our clients are dealing with is in the range of $1M - $15M.  We’ve seen transactions in a wide variety of sectors including health care, SaaS, e-commerce, services, industrials, and media.  All demand so far has been organically driven.

Our Focus

The goal is to be a one-stop destination for the due diligence needs of business buyers and private investors with any transaction < $25M.  To achieve this, DueDilio is focusing on educating the market, offering the right solutions, and delighting the customer. 

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Newsletter Sponsors
I’m thinking of having a few sponsors for this newsletter. If you’re interested in a conversation, please reach out.


🛠 Tools & Resources

These are tools & resources that I personally use or have used. They may contain affiliate links so I’ll get a few pesos if you sign-up.

ProjectionHub - Access to 50+ CPA-developed financial projection templates. 25% discount.

PrivSource - Deal aggregator for lower and middle-market listings.

Logology - Best automated logo & brand identity tool I’ve come across.

DeepBench - Access a cutting-edge expert network. $200 discount.

OpenPhone - The best business phone solution that I have found. $20 credit.

Eloquens - Knowledge marketplace. I’ve bought a few guides and templates here.

Deal Flow Scout - peer-to-peer deal flow exchange. Free, open, transparent.



That’s all for this issue of What I Learned Last Week!

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Important Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. This newsletter may link to other websites and certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, it has not been independently verified. The Business Inquirer makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. References to any companies, securities, listings, investments, or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any business, tax, or investment decisions. Content in this newsletter speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.