🧐What I Learned Last Week
A roundup of the most interesting SMB M&A content.
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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📰 Articles
Business broker FE International published a 2023 report on the state of SaaS M&A.
In this report, we dive into the metrics driving M&A trends in the near- and long-term, covering key topics such as:
The current state of the SaaS M&A market
SaaS valuations in 2023
VC and PE fundraising
In addition, we explore FE's proprietary M&A data to help business owners better understand value drivers to focus on in 2023 and beyond.
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Citizens Financial Group surveyed over 400 US middle-market companies and PE firms to gauge the state of the M&A market.
More than 80% of U.S. middle-market companies and private equity firms agree that company valuations will be stable or higher in 2023 after a year of big price adjustments, according to an annual survey by Citizens Financial Group Inc.
Most middle-market companies among the 400 respondents to the Citizens’ 2023 M&A Outlook expect better conditions in 2023 after macroeconomic uncertainty, inflation and steep losses in equities derailed deals in the past year.
Sixty-two percent cited growth as their motivation for M&A deals, up from 48% in 2022.
Middle-market M&A players expect conditions to stabilize in 2023
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Buy Small Sell High newsletter describes the ups and downs of first-year SMB ownership.
If you are embarking on the search fund journey without prior small business experience, just like we did, the volatility of day-to-day operations of SMBs can surprise you. Whether you are coming from a large corporate, consulting or investing background, you’ve likely always been several layers removed from the volatility of day-to-day operations and you were dealing with a larger organization with more redundancies and back-ups.
The Emotional Roller Coaster of First Year SMB Operations
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Permanent Equity published their 2022 annual letter where they reflect on the last 15 years of investing in SMBs. Highly recommend reading this one.
One of the many great quotes…
The truth is that Permanent Equity shouldn’t be what it is, but for an unexpected and abundant grace that has marked my life. My mistakes and shortcomings and failures, which deserved nothing but ruin, have been miraculously weaved into a beautiful tapestry of people and purpose and learning. We are blessed to be a blessing, and often that blessing comes from insights you can only gain in hardship.
Just this year, my small family suffered three deaths, one of which was a miscarriage. It feels awkward to talk about the topic of a miscarriage – it’s deeply personal and painful, and often goes unsaid, especially by men, in the midst of the passing, “How ya doing?,” of which the only proper response seems to be, “Good.”
Not many people are good when they answer, “Good.” Now after someone says, “Good,” I try to follow up with, “No really, how ARE you doing?” More often than not, the second answer is very different. Pain grows in darkness and flees from light. We’re all battling something, and battles aren’t won alone.
15 YEARS IN THE TRENCHES OF SMB ACQUISITIONS AND OPERATIONS: 2022 ANNUAL LETTER
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Mineola Search Partners wrote a great article on assembling and working with a Board of Directors.
Constructing a helpful, thoughtful, and trustworthy Board is among the prospective CEO’s most important decisions. Those CEOs who are fortunate enough to construct the majority of their Board have a once-in-a-lifetime opportunity to hand select the group of advisors, mentors, and coaches who will be sitting right beside them in arguably the largest and most important professional undertaking of their lives.
Constructing, Managing, and Working with a Board of Directors
🧵 Twitter
Great summary of the article I reference above…
For those looking at smaller acquisitions…
Some tips on improving those first interactions with a seller…
Great reminder on the importance of “margin of safety”…
Love this thread about the Med Spa industry…
If it ain’t broke, maybe don’t fix it…
Importance of legal due diligence…
Labor is key if you’re buying a trade business...
🤔 Thoughts, Events, Other
🛠 Tools & Resources
I want to share some tools & resources that I have found helpful. Please note that some of these may contain affiliate links. This means that I may receive compensation if you sign-up and use them.
PrivSource - Deal aggregator for lower and middle-market listings.
Cerebro Capital - Cerebro has a network of 1,500+ lenders who can provide debt financing for your acquisition, refi, etc. $500k minimum.
X5 Deals - Proprietary deal sourcing. They do the outreach and send you relevant, actionable deals directly into your inbox.
Curators - Proprietary deal sourcing. You need targets that fit your investment criteria, and Curators delivers week after week - we even update your personalized database on a daily basis with new information on best-fit targets.
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. Local Boston company and I consider the founder (Adam Ray) a friend.
The Website Flip - a newsletter that sends content sites for sale to your email inbox. They send deals each Wednesday and Friday.
Kumo - Find every deal in one complete platform. Spend less time sourcing deals and more time closing them. Kumo aggregates 180K+ business listings into one easy-to-use platform.
ProjectionHub - Access to 50+ CPA-developed financial projection templates. 25% discount using code “duedilio” at checkout.
Logology - Best automated logo & brand identity tool I’ve come across.
Deal Flow Scout - Peer-to-peer deal flow exchange. Free, open, transparent.
Deal Sourcing Guide - A directory I put together of online marketplaces, brokers, DFY deal flow, and more.
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.