What I Learned Last Week 11.8.2024
Curating the best M&A, SMB, and EtA-related content since 2020.
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In this week’s issue of What I Learned Last Week:
📰 Online Highlights
🧵 Best of X (Twitter)
🗓️ 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.
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📰 Online Highlights
I summarize, so you capitalize.
80% of small business owners trying to sell their business FAIL to do so
A Reddit (r/businessbroker) thread discusses the challenges small business owners face when trying to sell their companies, revealing that around 80% of small business listings on platforms like BizBuySell fail to sell. Contributors analyze BizBuySell's data, noting that only about 20% of businesses listed actually find buyers, a trend consistent over recent years. Participants highlight reasons for this low success rate, such as unrealistic price expectations, business models overly dependent on the owner, and the lack of professional representation, which may leave sellers vulnerable or poorly prepared for the complexities of business sales.
Key insights from the discussion:
Low Sale Success Rate: Only 20% of businesses on BizBuySell are sold annually, with similar rates in previous years.
Business Viability: Many small businesses are hard to sell, particularly when their success depends heavily on the owner's daily involvement.
Role of Brokers: Professional representation from brokers or advisors can significantly improve sale prospects by managing expectations and negotiating fair contracts.
Primary Deal Killers: Unrealistic price expectations and inadequate sale preparation are common reasons for deals falling through.
Fate of Unsold Businesses: Many owners continue operating or close their businesses if a sale isn’t feasible.
Frankly, I have not seen enough supporting data to agree with this 20% assumption but I think the discussion is interesting nonetheless.
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My experience as a first time business buyer
A Searchfunder post by Patrick M. shares insights from his journey as a first-time business buyer, detailing his experience purchasing a flooring company with an SBA loan. He outlines the benefits of working with a major SBA lender, which offered valuable guidance, but also notes some challenges, such as managing interactions with a remote lawyer. Patrick highlights the importance of trust in the seller, hiring knowledgeable staff, and understanding the buyer’s advantages when looking at owner-operated businesses. He also offers practical advice on pre-closing preparations to ease post-acquisition transitions.
Key takeaways from the discussion:
Value of a Reliable Lender: Using a major SBA lender was helpful; the bank not only funded the deal but also advised on terms, aiming to protect its investment.
Local Relationships Matter: Working with a local seller and hiring an experienced salesperson helped ensure a smooth transition and continuity in business operations.
Importance of Pre-Closing Preparation: Setting up essential accounts, vendor relationships, and other logistical details before closing would have saved time and reduced stress post-acquisition.
Challenges with Seller’s Brokers: Many brokers lacked effective communication around the SBA loan process, leading to delays and unmet expectations.
Strategic Buyer Advantage: Patrick observed a bargaining edge as a buyer willing to operate the business, as fewer buyers seek owner-operator roles in specific industries, which reduces competition.
Overall, Patrick is enthusiastic about his acquisition and offers to answer questions on the process, emphasizing thorough preparation, trustworthy partners, and the benefits of a clear transition strategy.
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The Case for Small Buyouts
RCP Advisors publishes part 1 of a 3-part series on the advantages of pursuing acquisitions in the lower middle market.
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The Best Fundraising Platforms for Business Acquisitions and Growth
This DueDilio article outlines several fundraising platforms tailored to small business owners and buyers seeking capital for acquisitions or growth. Each platform has unique features, targeting different business stages and funding needs, from quick access to SBA loans to AI-powered investor matching and networks of accredited investors. The guide emphasizes that choosing the right platform depends on the specific financing requirements, business profile, and desired speed of funding.
🧵 Best of X (Twitter)
I scroll, so you don’t have to.
Kirkland’s latest report reveals rising deal sizes, PE recap surges, and a private credit ‘Golden Age’ showdown…
Ever wonder why brokers cringe at unknown third-party QofEs? This story of a $50K QofE derailing a solid deal says it all…
Choose your game wisely, or risk being the sucker at the table…
Thinking of buying a business in 2025? Start prepping now to boost your funding odds and secure your dream deal…
🗓️ Events
University of Minnesota ETA Conference (Nov 15) - Minneapolis, MN
iGlobal Independent Sponsors (Dec 4) - New York, NY
SBIA Northeast PE Conference (Jan 8-9 2025) - New York, NY
SBIA Southeast PE Conference (Feb 13-14 2025) - Nashville, TN
iGlobal Independent Sponsors (Mar 4-5 2025) - Miami, FL
SBIA West Coast Capital Summit (Mar 25-27 2025) - Los Angeles, CA
HoldCo Conference (Mar 31-Apr 3 2025) - Sundance, UT
🎵 Listening: “Believe“ by Super Flu 🎵
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 outreach and send you relevant, actionable deals directly into your inbox.
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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