🧐What I Learned Last Week
Week ending Friday November 25, 2022
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.
Let’s connect: LinkedIn, Twitter
Hello Friends!
This issue of What I Learned Last Week is brought to you by Scott Oldford.
Scott Oldford is one of the top online business mentors and advisors and he also owns dozens of businesses that collectively generate tens of millions of dollars a year in multiple niches, countries (and even languages), across the world.
In his new "Investing with Scott" newsletter, he gives you a behind-the-scenes look into acquiring, building, and scaling businesses based on his experience of helping 100's of Entrepreneurs scale past 7 & 8 figures.
As an Entrepreneur since he was 7 and by 16 having a million dollar business while ending up a million in debt and now by 31, becoming a decamilionaire, he has a massive amount of insight, understanding, knowledge, and wisdom for scaling and building businesses.
You can check it out right here, perfect for Entrepreneurs and Investors alike.
📰 Articles
Guesswork Investing provides a framework for analyzing the replacement cost of the existing owner of a business.
Before figuring out how to replace the owners, you need to (deeply) understand what everyone even does at the business.
In any deal, figuring out how “how they make money” is my first priority for the first meeting - I wrote it about this nearly 18 months ago.
When you’re post-LOI in particular, this should become very granular. Here are some examples of process steps for a typical service contractor, along with questions you should be able to answer:
Customer finds them (Through what channels? All organic, some paid, mostly paid, etc? Who manages marketing?)
Customer contacts them (How? Web? Phone call? Text? Email? How fast do they respond?)
Quoting process (In-person / online / over phone? Who is capable of giving quotes? How are they delivered?)
Customer accepts quote (How do they accept? Deposit taken?)
Job is scheduled (Who does this? How many service visits per customer? What factors go into scheduling? Who handles staffing for jobs?)
Job Prep (Do client reminders go out? Do supplies need to be ordered? What prep work is needed? Who does all this?)
Job Day (How does dispatch work? Who talks to client? Who confirms work is completed properly?)
Invoicing (Who sends invoices? What are payment options & terms?)
Collections (Who handles collections? How common are non-paying customers?)
Admin & Bookkeeping (Who ensures accounting is correct? Who deposits checks? Who does taxes? Who maintains business licenses, sales taxes, etc.? Who handles payroll?)
Obviously simplified, but applicable for most local service businesses. Going through this investigation will probably kick up ideas for optimization or growth.
The next step is to map the company’s people against those roles & tasks to make sure you understand who does what.
Big Deal Small Business: Pro Forma Payroll in SMB
— — — — — —
Bloomberg Law highlights that in 2023, the M&A market may return to pre-2021 levels.
As we approach 2023, the mergers and acquisitions market continues to be described as “slow” and “uncertain,” and those trends are likely to continue into the new year.
Despite this outlook, the 2023 deal forecast may not be as dreary as some predict. M&A activity in 2021 reached historic levels, and it’s hard to beat records year after year. So 2023—even if slower than 2022—could represent a return to normal in the M&A market.
Market Comes Down From Historic 2021
M&A deal volume—covering a wide variety of transaction types including minority stake transactions, private equity deals, and venture capital financing rounds—visibly slowed in 2022, and the numbers for Q3 paint a discouraging picture heading into Q4 and 2023. Q3 2022 had the third-lowest global M&A deal volume ($722 billion) since 2017. Only Q1 and Q2 2020 had lower deal volumes—$704 billion and $444 billion, respectively.
ANALYSIS: 2023 M&A Market May Reveal a Return to Pre-2021 Levels
🧵 Twitter
How to get investors interested in your deal…
Take advantage of these tax strategies…
Good thread on how different types of buyers view deals…
Great summary of available resources for business buyers…
There’s a lot to be thankful for…
🤔 Thoughts, Events, Other
Course Deals
Colin Keeley of Indie PE is offering 50% off his “How to Buy a Small Business” course for the next few days. Use code “BLACKFRIDAY” at checkout.
Mushfiq Sarker of The Website Flip is offering 40% off on a bunch of his products including the website flipping course. Use code “BFCM” at checkout.
🛠 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.
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 - Proprietary deal flow, deal aggregator, and exit prep. Local Boston company and I consider the founder (Adam Ray) a friend.
PrivSource - Deal aggregator for lower and middle-market listings.
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.
DeepBench - Access a cutting-edge expert network. $200 discount.
OpenPhone - The best VoIP phone solution that I have found. I use this for DueDilio. You get a $20 credit if you sign-up.
Eloquens - Knowledge marketplace. I’ve purchased a few templates from them.
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!
Help us improve with anonymous feedback. How did you like this issue of the newsletter?
If you enjoyed reading this newsletter, why not share it?
Let’s connect: LinkedIn, Twitter
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.