What I Learned Last Week 11.29.2024
Curating the best M&A, SMB, and EtA-related content since 2020.
Hello Friends!
In this week’s issue of What I Learned Last Week:
📰 Articles
🧵 Online Highlights
🤔 Other - Perfect SMB Industries, Black Friday Deals
🗓️ Events
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by:
Close Your Deal Quickly and Efficiently: M&A Legal Solutions Integrating Automation and Project Management
At Sterrett Law, we’ve developed a streamlined process using cutting-edge automation and project management techniques to maximize speed and efficiency. Using templates and a client-centered collaborative process we’ll keep your deal on track and on time.
Ready to make your next move? Schedule your free consultation today!
📰 Articles
I summarize, so you capitalize.
All About M&A Modeling - 7 Steps to Build an M&A Model
The guide from Exitwise explains M&A financial modeling. It outlines the process in seven steps, including assumptions, financial projections, company valuations, and accretion/dilution analysis. Different models like DCF, three-statement, and LBO are detailed, each suited to specific transaction types. The article highlights how modeling informs deal pricing, risk assessment, and strategic alignment.
Key insights include:
M&A models aid in predicting financial impacts and setting purchase prices.
Common models include DCF, M&A, and LBO.
Expert guidance enhances model accuracy and negotiation outcomes.
— — — — — — — — — — — —
Is Entrepreneurship Through Acquisition (EtA) Right for You?
Entrepreneurship through Acquisition (EtA) enables individuals to purchase and manage existing businesses instead of starting one. It offers advantages like established cash flow and customer bases but requires strong leadership, financial skills, and risk tolerance. Buyers must evaluate personal goals, financial readiness, and desired industries to succeed. Challenges include deal competition, cultural transitions, and operational risks. A clear self-assessment is critical to determine suitability for EtA.
Key insights include:
Importance of leadership and industry knowledge.
Financial planning through loans, savings, or investors.
Managing acquisition risks and operational transitions.
🧵 Online Highlights
I scroll, so you don’t have to.
Want financial freedom through acquisition? Buy one profitable business, stay frugal, pay off debt, invest wisely, and build a self-sustaining income stream. Simple, powerful plan…
Broadly shopped deals aren’t always rejects. Quality businesses can be found in any process—success comes from building relationships, acting professionally, and narrowing your focus…
From corporate layoffs to owning a 31-year-old forklift repair business, this journey shows how resilience, planning, and action turn setbacks into opportunities…
Quickly screen acquisition targets like a pro: solid finances, transferable operations, manageable risks, reasonable sellers, and growth-ready markets. A blueprint for smart buys…
Important to have clearly defined acquisition criteria…
🤔 Other
Perfect SMB Acquisition Industries
I thought I’d have a bit of fun with ChatGPT and see how it would answer the question of which industries pass this test:
Here’s the ChatGPT answer:
Industries that match the criteria for the "perfect SMB acquisition industry" — being highly fragmented, growing at more than 3x GDP, stable with low cyclicality, and having low external risk factors — often fall into the following categories:
1. Home Services
Examples: HVAC, plumbing, electrical, landscaping, pest control.
Why it fits:
Highly fragmented with many small, local operators.
Stable demand driven by necessity (e.g., repairs, maintenance).
Growing due to urbanization, rising housing stock, and aging infrastructure.
Low external risk factors, as these services are often recession-resistant.
2. Health and Wellness Services
Examples: Physical therapy clinics, dental practices, optometry, dermatology, elder care.
Why it fits:
Highly fragmented with significant local presence.
Growing due to demographic shifts like aging populations.
Stable and essential; people prioritize health regardless of economic conditions.
Low external risk factors, with steady cash flow and low cyclicality.
3. Pet Care and Services
Examples: Veterinary clinics, pet grooming, boarding, pet training.
Why it fits:
Highly fragmented, with a mix of independent operators and small chains.
Growing due to increasing pet ownership and higher spending per pet.
Stable demand; people consider pets as family members.
Low external risk factors; not subject to significant regulatory or economic shocks.
4. Specialized B2B Services
Examples: IT managed services, commercial cleaning, security services, equipment repair.
Why it fits:
Fragmented markets with many niche providers.
Growing as businesses outsource non-core activities.
Stable due to consistent demand from businesses.
Low external risk factors, often driven by long-term contracts.
5. Education and Tutoring
Examples: Test prep, childcare, after-school programs, professional training.
Why it fits:
Highly fragmented, with many small local players.
Growing due to increased focus on education and skill development.
Stable, as education is a priority even in downturns.
Low external risk factors; often not dependent on economic cycles.
6. Food and Beverage Distribution
Examples: Specialty food distributors, beverage logistics, coffee supply services.
Why it fits:
Highly fragmented; many niche players serve regional markets.
Growing due to consumer trends (e.g., organic, craft, and local sourcing).
Stable demand; food and beverages are staples.
Low external risk factors, with limited exposure to rapid technological change.
7. Logistics and Transportation
Examples: Local trucking, last-mile delivery, warehousing, freight brokerage.
Why it fits:
Highly fragmented, with many regional operators.
Growing due to e-commerce and supply chain optimization.
Stable, driven by ongoing need for goods movement.
Low external risk factors, with a broad customer base.
8. Niche Manufacturing
Examples: Custom packaging, specialty tools, precision parts.
Why it fits:
Highly fragmented, with many small firms serving specialized markets.
Growing as demand for niche or custom products increases.
Stable with predictable demand in specific industries.
Low external risk factors, often protected by proprietary know-how or long-term customer relationships.
9. Professional Services
Examples: Accounting firms, legal practices, marketing agencies, consulting.
Why it fits:
Highly fragmented with many boutique providers.
Growing due to the increasing complexity of tax, legal, and marketing landscapes.
Stable with recurring revenue models (e.g., retainers, subscriptions).
Low external risk factors, as these services are universally needed.
These industries typically align with the "perfect SMB acquisition" criteria due to their resilience, scalability, and predictable cash flow, making them attractive for small business buyers and investors.
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Black Friday Deals
Some of these may be random but I want to share some Black Friday deals I’ve either taken advantage of or think might be relevant to you:
20% off tickets with code BLACKFRIDAY20.
Don’t miss this top-tier event for owning and scaling multiple businesses.
$100 off each of your first three months with code BLACKFRIDAY300.
Perfect for joining a community of small business CEOs solving real challenges.
50% off premium subscriptions with code SECRETBLACKFRIDAY.
Access $1,000,000+ in software savings to run, scale, and operate your business.
20% off.
One of the best water filters available—pricy but not many alternatives. I’ve been using them and highly recommend them.
Fantastic Black Friday deals.
Award-winning independent speaker brand with an excellent value-to-quality ratio. I’ve been a fan for many years and have their full setup for my home theater.
25% off gift cards (no expiration).
Great for NYC or Miami favorites like Pastis, Balthazar, and Morimoto. My wife and I stock up on these.
🗓️ Events
iGlobal Independent Sponsors (Dec 4) - New York, NY
SBIA Northeast PE Conference (Jan 8-9) - New York, NY
UM Ross EtA Conference (Jan 23-24) - Ann Arbor, MI
Babson College EtA Conference (Feb 7) - Boston, MA
SBIA Southeast PE Conference (Feb 13-14) - Nashville, TN
MIT EtA Conference (Feb 28) - Cambridge, MA
iGlobal Independent Sponsors (Mar 4-5) - Miami, FL
SBIA West Coast Capital Summit (Mar 25-27) - Los Angeles, CA
HoldCo Conference (Mar 31-Apr 3) - Sundance, UT
🎵 Listening: “Take on Me - Kygo Remix“ by a-ha, Kygo 🎵
How did you like this issue of the newsletter?
⚒️Tools & Resources
I want to share some tools & resources that I have found helpful. Please note that some of these are paid sponsors or affiliates of the newsletter.
PrivSource - PrivSource helps you source deals and connect with transaction partners without ever paying a success fee.
X5 Deals - Proprietary deal sourcing for a great price. They do the tedious and time-consuming job of deal sourcing so you can spend more time on DD and closing.
Rejigg - Platform that connects searchers/investors directly with owners of off-market small businesses ($200k - $3M EBITDA) considering exits. All deals are sourced by the Rejigg team. Their team adds 15 to 20 new deals each week.
Kumo - 100,000+ deals sourced from thousands of brokers and marketplaces. Plus, AI-powered listings, robust data & analytics, and more.
DealFlowXchange - The premier private capital funding community for raising and deploying capital. Use discount code DUEDILIO for 20% off your lifetime membership.
Sterrett Law - At Sterrett Law, we offer Manhattan and Boston experience at Vermont prices. Specializing in deals under $10 million, we're your go-to partner for navigating the complexities of mergers and acquisitions without the hefty price tag
BizNexus - Marketplace + off-market origination in one platform. The marketplace averages about 10k active listings & pre-CIM opportunities, and the off-market origination focuses on data & multi-channel.
Secret - Say goodbye to overspending on SaaS. With Secret, you get access to up to $1,000,000+ in savings on the best software to run your search, operate, and scale your business.
Deal Sourcing Guide - a comprehensive list of business marketplaces, brokers, deal origination firms, and more.
💡 How I Can Help
Whenever you’re ready, here are a few ways for us to work together…
Schedule 1:1 consulting on deal sourcing, due diligence, M&A ecosystem, newsletters, entrepreneurship, or anything else you’d like to discuss
Promote your brand to business buyers, investors, SMB owners, and other M&A participants by sponsoring this newsletter
Assemble your M&A deal team with DueDilio
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