🧐 What I Learned Last Week
Week ending Friday, December 24 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!
I’m on a beach sipping fruity drinks with an umbrella. That means this issue is a bit lighter than normal.
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📰 Articles
Chenmark released their Main Street Market Report where they survey SMBs about business trends and concerns.
Chenmark owns and operates a collection of small businesses in various industries in the United States and Canada. We have often commented internally that the on-the-ground insights we garner by being intimately involved with our companies provides us with a unique viewpoint into “main street” sentiment – i.e, how does a landscaper in Maine feel about inflation? How does a food manufacturer in Western Canada feel about vaccination mandates? As we started our careers in global macro investing, we can see the value of collecting and analyzing micro pieces of information to help inform our macro viewpoints.
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Coefficient Capital published an interesting slide show outlining some consumer trends for 2022. There are close to 80 slides filled with data on spending, logistics, macro topics, and more.
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MicroAcquire has raised $5M for it’s startup sale marketplace. That brings the total raised to around $11M. Of particular note is that they are moving towards a standard brokerage model by charging 2-3% transaction fee.
Details: Founded in January 2020, MicroAcquire says it has more than 100,000 registered buyers, more than 2,000 companies listed for sale, and has facilitated more than 500 deals with a combined value of more than $200 million.
It currently generates revenue by charging buyers a subscription fee to have full access to the listed startups and be able to contact them, although it plans to start taking a transaction fee (2-3%) next year, says founder Andrew Gazdecki.
It's also added a marketplace for deal vendors like lawyers, advisors and bankers, and has inked partnerships with AngelList and Pipe for deal financing (though most sales are still done fully in cash).
This latest cash infusion was prompted by existing backer Shrug Capital, with other existing investors jumping in to fill out the round within three days.
MicroAcquire raises $5 million for its startup sale marketplace
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Last week I shared a link to a Google Drive that had a bunch of great “2022 Trends” presentations from various consultancies. I found another collection of presentations posted by Spacecadet Ventures.
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Richard Patey of Investing.io shared his current perspective on investing. He’s fully in the risk-off camp and sold all his crypto holdings. Good read.
The best alternative asset (plus deals)
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In The Trenches published a post about unique considerations when acquiring a software company. Their first post talked about financials and the latest one talks about product.
Much of what I discuss below is intended to uncover how much “technical debt” any given target company may possess within their code base (I will define technical debt shortly). Though substantially every software company has some amount of technical debt, those that are weighed down by an asymmetric burden of it tend to:
Ship code less frequently;
Struggle to keep pace with competitors;
Release fewer new features and spend more time fixing bugs;
Regularly miss release targets;
Possess code bases that are difficult to build upon;
Have slower implementations;
Generally be much more expensive and capital intensive to operate and grow
Considerations Unique to Acquiring a Software Company (Product)
🧵 Twitter
Guessing most of you already know this…
This is spot on. A big reason why I started this newsletter…
A lot of factors drive M&A activity in the lower and middle markets. I don’t know if these same points matter for micro-acquisitions…
Good discussion on when an SBA loan makes sense…
A bit off-topic but an interesting discussion about the airline industry…
Ah, so this is why my plumber charges me $2k for a $300 job. Performance Pay. Gotcha. JK. Some good points here on how to shift compensation…
Guide on starting a janitorial business. At this point, it sorta feels like a race to the bottom. What are some other occupations that parents tell their kids never to get into?
This would work for any type of business, not just SaaS…
Like I always say - politics and religion sell…
Love this whole story…
🤔 Thoughts & Commentary
Reader Survey
Last week I asked readers to vote on their preferred type of business to acquire. I received <100 responses so I don’t think this is a large sample size.
Looks like a lot of you are looking for micro-acquisitions at <$100k. SaaS, offline business, and e-commerce are the most popular business types. Full breakdown is below.
For those who are looking for an offline business - what would you want to see me write about? Is it helpful if I highlight a landscaping company in Arizona (for example)? Just curious to get your opinion on how I can add more value to you.
None of you seem to be interested in an online service business. Interesting. I like these types of businesses but a lot of them are hard to scale. I get that.
Otherwise, these responses are not inspiring me to change what I’m doing. I’ll continue to focus on online businesses. I’ll continue to highlight more SaaS than other business types. I’ll continue to throw in some <$500k listings but also larger ones.
🛠 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.
Calendly - Leading scheduling platform to easily schedule meetings without the back and forth. I’ve been using it for several years now. Free 14-day trial.
ProjectionHub - Access to 50+ CPA-developed financial projection templates. 25% discount using code “duedilio” at checkout.
BizNexus - Proprietary deal flow, deal aggregator, and exit prep.
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.