What I Learned Last Week
Week ending Friday September 16, 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.
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📰 Articles
XO Capital writes about the pros and cons between sales-led and product-led micro-SaaS companies.
“In short, you're not getting a free lunch no matter which you choose. You can either chose to invest in engineering + sales or content + distribution. Yes, of course doing both would be great, but let's pretend you're trying to run profitably, in which case you really don't have the cash to chose both.”
Enterprise (Sales Driven) vs Product Led Growth Companies
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The Middle Market highlights a recent Axial report that showed sell-side activity is at record levels but buyers are being more selective.
“While the buy-side is receiving more dealmaking mandates and sell-side activity is high, only 25 percent of 2022 pursuit rates are above Axial’s threshold, showing more evidence that buyers are being selective and representing a decrease from 2021.
“There is still plenty of appetite to do deals in today’s market, buyers are just more conservative when it comes to making offers,” says Peter Lehrman, CEO of Axial. “Buyers are hesitant to think that 2021 is repeatable, and looking at pre-pandemic numbers isn’t particularly helpful since the economy was at such a high. That makes forecasting especially difficult, and in tandem with the higher interest rate environment, it often creates a pricing disconnect between buyers and sellers.”
Sell-Side M&A Reaches New Heights as Buyers Remain Picky
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David LaMore shares his 1Q22 update on his search fund and lessons learned.
A couple of key points:
Focus on key business questions during the first owner call to efficiently qualify
Owners care deeply about transparency, collaboration, and flexibility when discussing a potential exit
Don’t spend too much time diving into industries where your search fund is not a viable buyer
Don’t spend too much time hiring interns
More personalized email sequences drive better response rates
🧵 Twitter
Great tips for those looking at micro-SaaS deals…
Love this breakdown. There are takeaways for other industries as well…
Know the lingo and what it really means…
It’s all about persistence and shots on goal…
Simple ways to optimize your SMB ops…
A lot of great lessons when searching for an acquisition…
What makes a great business…
🤔 Thoughts, Events, Other
Re-pricing
Hearing whispers of some name-brand private equity firms going back to the underwriting table to re-price their deals. The outcome of this exercise is that many will simply walk away from these transactions. This would lead to a sharp market correction. The next few months will be interesting.
🛠 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!
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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.