What I Learned Last Week 8.18.23
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)
🗓️ Events
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by Smash.vc
Buying a business with the SBA?
Would having a capital partner help?
At Smash.vc, they do two things:
Buy minority stakes in existing small businesses.
Partner with entrepreneurs trying to acquire new ones.
If you're actively looking to buy a cash-flowing business using an SBA loan, hit them up if you'd like a partner.
They contribute capital, give advice, or help with growth when asked... but stay out of the way the rest of the time.
Silent partners there to help when necessary, nothing more.
If interested 👉 go say hi.
📰 Articles
Growthbar Acquisition Teardown
Growthbar represents XO Capital's 10th acquisition, and it is their largest to date. In their most recent blog post, they dissect the acquisition, detailing the listing on Microacquire, the analysis involved, and the factors that culminated in the successful closing of the deal.
At a high level, here's what we liked about the business:
It was a good size for us. ~$25k MRR + The asking price was reasonable < 3x ARR
The product had a really fast time to value for customers
Mostly direct, organic traffic
Low customer concentration
122% growth rate over previous year.
The original contractor who built the platform was willing to continue helping us on an hourly basis.
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Middle Market DealMaker | Fall 2023
The latest Fall issue of Middle Market DealMaker, courtesy of Middle Market Growth, is now available. Private equity deal activity is showing signs of a gradual recovery, but to make transactions successful, both buyers and sellers must innovate when it comes to deal terms.
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Post-Close Unexpected SMB Costs
As the founder of DueDilio, I engage in daily discussions with Searchers regarding deal costs. What tends to be overlooked, however, are the unforeseen expenses that may arise after a deal has been finalized. The newest issue of the Big Deal Small Business newsletter delves into these unexpected costs.
These are costs that the former owners just weren’t incurring for one of a few reasons:
Owner Self-Performed: They handled certain tasks themselves and you can’t.
Missing Costs Altogether: They didn’t do certain tasks (often related to legal / admin) that you intend to do.
Off the Books / Gray Areas: They paid for certain services/tasks under the table or out of their own pocket, and now you have to actually pay for those. Or they just didn’t do them, and they really should have.
🧵 Best of X (Twitter)
We’re in a good market for acquisition entrepreneurs…
Searchers are chasing larger deals as the popularity of EtA has grown…
Valuation matters…
Think twice before keeping the seller in the business post-close…
On the mechanics of a forgivable seller note. They’re allowed by the SBA if structured correctly…
Valuation is equal part art and science. Here’s a great breakdown of a scenario where SDE may be more appropriate than EBITDA…
Avoid these mistakes when searching for an acquisition…
🗓️ Events
Southeast ETA Conference (Sept 8-9) - Durham, NC
HoldCo Conference (Sept 18-20) - Cleveland, Ohio
Austin SMB Meetup (Sept 28) - Austin, TX
Buy Grow Sell Summit 2023 (Sept 5-6) - Virtual
EtA Forum Asia Pacific (Sept 14-15) - Sydney, Australia
The Self-Funded Search Conference (Sept 30 - Oct 1) - Dallas, TX
Booth Kellogg EtA Conference (Nov 1) - Chicago, IL
Main Street Summit (Nov 8-9) - Columbia, MS
Capital Camp (May 21-24) - Columbia, MO
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. 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 software businesses ($500k - $15m revenue) considering exits. All deals are sourced by the Rejigg team, ~5 added per week.
Acquisition Lab - The Premier Accelerator for Buying a Business created by Walker Deibel, Author of Buy Then Build: How Acquisition Entrepreneurs Outsmart the Start-up Game. They combine world-class education, a vetted community, extensive group coaching, and resources to provide the first do-it-with-you buy-side advisory service.
Smash.vc - Whether you're looking to sell minority stakes in your business to take some chips off the table, looking for a partner to acquire an asset, or needing capital to complete an SBA deal, we'd love to chat with you.
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.
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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