What I Learned Last Week 2.7.2025
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
🗓️ Events
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is brought to you by:
Connecting Deal Sponsors with Investors
Are you an accredited investor looking to allocate to attractive SMB deals? Get notified of new opportunities.
Have a deal under LOI and need equity capital to close? Post your deal on CapitalPad.
CapitalPad is an investing platform allowing searchers to raise capital for SMB acquisitions, and allowing investors to finally get access to this hard to find asset class.
Get started here: CapitalPad.com
📰 Articles
I summarize, so you capitalize.
Tax Structuring (Part 1)
The article explains tax structuring for business transactions, emphasizing the advantages of asset purchases over equity deals. An asset purchase allows buyers to step up the tax basis of acquired assets, leading to depreciation benefits and potential tax savings. However, equity deals may sometimes be necessary due to contractual restrictions. The piece explores how certain LLC structures allow equity purchases to be treated as asset purchases for tax purposes.
Key insights include:
• Asset purchases provide tax advantages via stepped-up basis.
• Equity deals lack these benefits but may be required in some cases.
• LLCs taxed as disregarded entities or partnerships can, under certain conditions, be treated as asset purchases.
• Internal Revenue Code Sections 338(h)(10) and 336(e) may allow equity deals to be taxed as asset purchases in specific scenarios.
— — — — — — — — — — — —
BizBuySell 4Q24 Insights Report
The BizBuySell Insight Report shows a 5% increase in small business acquisitions in 2024, driven by higher-priced deals. Despite Fed rate cuts, financing remains tight. Manufacturing, tech, and construction acquisitions surged 32%, while retail and restaurants stayed flat. Inflation pressures persist, and potential new tariffs are a concern. More business owners are exiting due to retirement and economic uncertainty. Private equity interest is growing, and young MBAs are entering the market. Creative financing solutions are essential for 2025.
— — — — — — — — — — — —
CapitalPad review: The new private equity marketplace for SMBs
The article from Alts reviews CapitalPad, a platform connecting accredited investors with SMB acquisition entrepreneurs. CapitalPad focuses on “boring businesses” like HVAC and dry cleaners, offering stable, cash-flowing investment opportunities. It supports both self-funded searchers and independent sponsors in acquiring profitable SMBs. The platform vets deals thoroughly, prioritizing recession-resistant businesses. Investors can earn income through profit distributions or long-term exits. CapitalPad charges a 20% carry but no management fees. While new, its founder has deep SMB investment experience.
Note: Capitalpad is a sponsor of this newsletter
— — — — — — — — — — — —
Finding the Right Search Fund Path: A Personal Journey Turned Practical Guide
Katherine Butler-Dines explores three search fund models—traditional, accelerator, and self-funded—highlighting their ownership structures, financial risks, and autonomy levels. Traditional and accelerator searchers receive funding and mentorship but own only 25–30% of their acquired businesses. Self-funded searchers retain majority ownership but assume personal financial risk. Butler-Dines chose self-funding for full control despite its challenges.
Key insights:
• Traditional and accelerator models provide structure but limit ownership.
• Self-funded searchers take on risk for greater control.
• Choosing the right path depends on one's priorities.
— — — — — — — — — — — —
Five Non-Negotiables To Understand Before Closing
The article from Big Deal Small Business highlights five critical areas buyers must understand before acquiring a small business: the owner's actual role, operational processes, cash flow mechanics, true EBITDA and financials, and legal compliance. Many sellers understate their involvement, and buyers risk underestimating operational complexity and financial requirements. Mapping workflows, securing adequate working capital, and ensuring regulatory compliance are essential. Due diligence in these areas prevents costly surprises and ensures a successful transition.
Key insights:
• The seller’s real workload may be greater than stated.
• Understanding revenue generation vs. cash flow timing is crucial.
• Unaccounted costs can impact post-acquisition profitability.
• Legal compliance failures pose serious financial risks.
• A thorough operational review helps avoid surprises.
🧵 Online Highlights
I scroll, so you don’t have to.
E-commerce brands are stuck in a cash crunch—shrinking growth, rising costs, and limited capital are squeezing profits. Read this post if you’re exploring this space…
Valuing a small business isn’t just about numbers—it’s about reality. SDE for small deals, EBITDA for larger ones, and the right multiple depends on risk, trends, and buyer fit…
Buying $1 of profit in small businesses costs far less than in the S&P 500—but with higher risk and illiquidity. For savvy investors, it’s a wealth-building goldmine…
The "Step-Up" in self-funded search deals helps investors compare risk-adjusted returns across different leverage levels…
Want to buy an accounting firm? Focus on $250K+ SDE, 30%+ revenue from bookkeeping/payroll, and at least two tax pros staying post-close. Most deals won’t fit but be patient…
🗓️ Events
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
SMBash (Apr 2-4) - Dallas, TX
2nd Annual UCLA ETA Search Fund Roundtable (Apr 9) - Los Angeles, CA
🎵 Listening: “My Mind“ by Belters Only 🎵
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.
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
If you enjoyed reading this newsletter, why not share it?