What I Learned Last Week 3.22.2024
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
🧵 Best of X (Twitter)
🤔 Other - AI Newsletter Summaries
🗓️ Events
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by:
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📰 Articles
Private Equity Outlook 2024: The Liquidity Imperative
The Bain Capital Global Private Equity Report 2024 presents an optimistic outlook for the private equity sector, despite recent challenges posed by rising interest rates. It stresses the importance of innovative strategies in value creation and liquidity solutions for overcoming obstacles in dealmaking, exits, and fundraising. The report also reviews the difficulties faced in 2023 and suggests a path forward for the industry to regain momentum.
Key insights include:
A sharp decline in deal and exit values in 2023 due to rising interest rates.
The necessity for private equity firms to innovate in value creation and liquidity solutions.
The long-term outlook for private equity remains positive, with potential for recovery and growth.
Strategic adjustments are essential for the industry to navigate current challenges and capitalize on opportunities.
You can read a good summary of the report by BloomVP here.
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Answers to Recurring FAQs from Current and Prospective Searchers
The article by Mineola Search Partners provides comprehensive answers to frequently asked questions by individuals engaged in or considering the search fund process. It covers key aspects of the search fund journey, including preparation, acquisition, and post-acquisition strategies.
Key insights include:
The significance of diversity in cap table construction.
Differences between Canadian and U.S. search fund ecosystems.
Effective targeting strategies for businesses.
The balance between proprietary and brokered deal flows.
Best practices for engaging with potential sellers.
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Exploring ROA in SMB Acquisitions
Dan Tagliatela employs a strategic approach to evaluate potential business acquisitions, focusing on quantitative and qualitative factors. He emphasizes the importance of Return on Assets (ROA) for assessing a company's efficiency in using its assets to generate profit. His methodology is informed by his background as a public equity analyst and aligns with investment principles advocating for efficiency and profitability metrics like ROA and Return on Invested Capital (ROIC).
Key insights include:
ROA as a critical measure for pre-acquisition evaluation.
Asset efficiency analysis to gauge required investments versus potential returns.
Comparative industry analysis to identify high-performing businesses.
Assessment of business models for sustainability and competitive advantage.
Evaluation of long-term sustainability of high returns and risk assessment.
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Why Onfolio stopped buying Content sites (and pivoted to digital agencies)
This is a really good read by the Alts team. Especially relevant for those looking at content websites. Onfolio has shifted its investment strategy from content sites to digital agencies due to the evolving challenges in content creation, notably the rise of AI and Google's algorithm changes. This pivot leverages Onfolio's strengths in scaling online businesses, focusing on the digital agency sector's resilience and demand.
Key insights:
Challenges with AI and Google algorithms prompted Onfolio's strategic shift.
Digital agencies offer stability and high demand.
Onfolio leverages expertise in scaling online businesses through this pivot.
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How To Grow Any Agency
Dominic Wells of Onfolio outlines methods for scaling digital agencies, focusing on financial metrics improvement. He suggests strategic adjustments like price increases, cost reductions, and prioritizing high-margin services to boost profitability and growth.
Key strategies include:
Enhancing gross margins and net margins.
Optimizing sales and marketing expenses.
Concentrating on high-margin offerings.
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How Long Does it Take to Sell a Business?
The time it takes to sell a business can range significantly, with factors such as business type, financial health, and market conditions affecting the timeline. Preparation, strategic timing, and professional assistance can streamline the process.
Key insights include:
The sales process duration varies widely.
Importance of business preparation and timing.
The role of brokers and M&A experts in facilitating the sale.
Incentivize your team to win
John Wilson outlines strategies for incentivizing teams effectively, focusing on establishing clear success metrics, aligning individual and company objectives, and rewarding performance. He advocates for straightforward, impactful incentive schemes and the importance of monitoring key performance indicators to cultivate a motivated and achievement-oriented organizational culture.
Importance of clear success metrics.
Aligning individual goals with company objectives.
The effectiveness of straightforward incentive programs.
Monitoring key performance indicators is crucial.
🧵 Best of X (Twitter)
Nice summary of the latest SMB data from IBBA…
Crowdsourced valuation multiples…
All about seller notes…
Capital is easy, deal sourcing is hard…
On raising capital…
Partnership interests…
Good discussion around lower end of the market. A bit of a controversial topic…
🤔 Other
AI Newsletter Summaries
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🗓️ Events
Wharton ETA Summit (March 21-22) - Philadelphia, PA
ACG Texas Capital Connection (Apr 2-3) - Dallas, TX
UCLA Anderson ETA & Search Fund Roundtable (April 3) - Los Angeles, CA
West Coast Capital Summit (Apr 9-11) - Huntington Beach, CA
SMBash 2024 (Apr 18-20) - Salt Lake City, UT
INSEAD ETA Conference (May 11) - Fountainebleau Campus, France
M&A Launchpad Conference (May 11) - Houston, TX
IBBA 2024 Annual Conference (May 11-12) - Louisville, KY
Capital Camp (May 21-24) - Columbia, MO
Midwest Deal Summit (May 29-30) - Chicago, IL
Southeast EtA Conference (Sept 6-7) - Washington D.C.
Self-Funded Search Conference (Sept 30-Oct 1) - Dallas, TX
Main Street Summit (Oct 9-10) - Columbia, MO
Annual M&A Institute (Oct 10-11) - Dallas, TX
McGuireWoods Independent Sponsor (Oct 15-16) - Dallas, TX
Texas & The South M&A and Business Symposium (Oct 16-18) - Dallas, TX
National Summit for Middle Market Funds (Oct 27-29) - Palm Beach, FL
🎵 Listening: “Dum Da“ by The Tretment
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 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 ($1M - $10M of revenue) considering exits. All deals are sourced by the Rejigg team. Their team adds 7 to 10 new deals each week.
Kumo - 100,000+ deals sourced from thousands of brokers and marketplaces. Plus, AI-powered listings, robust data & analytics, and more.
Search Fund Coalition - community for the Entrepreneurship Through Acquisition ecosystem. Monthly events and meetups for acquisition entrepreneurs.
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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