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🧐 What I Learned Last Week

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What I Learned Last Week

🧐 What I Learned Last Week

Curated M&A, SMB, and EtA-related content for week ending 3.10.23

Roman Beylin
Mar 10, 2023
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🧐 What I Learned Last Week

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Hello Friends!

This issue of What I Learned Last Week is brought to you by DueDilio.

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📰 Articles

Search Fund CEO - 100 day plan

An old post on Searchfunder recently came up and I want to share the link here. It’s a detailed view of what a new CEO can expect in the first 100 days. It’s a great read.

From my experience as a CEO of several companies as well as working with hundreds of entrepreneurial leaders and the new breed of Search Fund CEO's, here are my recommendations:

1. Look at it through a first six months lens vs 100 days. (100 days is an arbitrary number anyway, likely stolen from US Presidents during their inaugural address.) Take the time to learn about your new business from the inside. Find out what you really have to work with and what you really need to work on. In those six months, take the time to get to know:

o Your leadership team - the quality of this team will make or break you

o Your top 20 customers - they are the life blood that keeps the doors open

o Your top 10 vendor relationships - they keep the lights on and product moving

o Your Board of Directors - they should be asking the toughest questions

o Your processes and systems - where do things flow and where do they bind up?

2. You may want to move right into action mode and start putting your stamp on the business. Resist that temptation. Here are the things you can do that will create a positive and lasting foundation as you move from searcher to CEO in your first six months:

o Make few promises - You don't have all the facts yet and it's tough to walk back a promise.

o Realize your actions have 10x more impact than your words. Whether you notice it or not, everyone is watching. Do you take long lunches, cut out of work early to see you son's little league game, hold closed door meetings, tell off-color jokes? They notice.

o Meet everyone in the company. Learn their faces & names. If you can, find out what it is that drives them to come to work every day. It may be a passion to write good code or to pay for their kid's college. They don't care how much you know, until they know how much you care.

o Avoid hiring or firing anyone in your first six months (and certainly your first 100 days) if at all possible. Until you have understood all of the company dynamics, just take it all in.

o Expect at least one major crisis or disaster. It may not be COVID-19 or a trade war with China, but there will be something. By knowing what/who you have to work with, you better understand your ability to manage the crisis.

— — — — — — — — — — — — — — — —

🔟 Software Apps Every SMB Should Know

EADS Bridge Holdings shares their list of the 10 software apps that they’ve found the most useful.

Importantly, this post is not about the future but rather apps that we know can be useful for you today and won’t break the bank. The main criteria for choosing these apps was:

  • Cost effectiveness – doesn’t always mean cheap, but you’ll get bang for your buck (although many of these apps are also surprisingly cheap or even free)

  • Flexibility – adaptable to your workflow rather than requiring you to adapt to the software

  • Connectivity – built for integrating seamlessly with other applications so you can build your business system

  • Superpower – the capability that sets this app apart

— — — — — — — — — — — — — — — —

FedEx Routes versus UPS Stores

The Wolf of Franchises is a great newsletter that I follow. Their recent issue analyzes a FedEx route vs. a UPS store. Great read, especially if you’re looking at this space.

Overall, both FedEx and UPS have hundreds (if not thousands) of operators that are able to leverage the brand to create their own individual business.

While FedEx Routes and UPS Stores do compete, the business opportunities are fundamentally different, as one is a brick-and-mortar business, while the other is purely service-oriented. 

Like I’d say with any franchise, each business should be evaluated on a case by case basis. But on average, it appears that a UPS Store offers more predictable revenue, and likely more profits. 

— — — — — — — — — — — — — — — —

Unpacking 2022’s Dead Deals and Broken LOIs

I love this article from Axial. They surveyed their members to understand the main reasons behind deals falling apart. Highly recommend you read this one.


🧵 Best of Twitter

On how to structure a business acquisition that includes real estate…

Twitter avatar for @codywagee
Cody Agee @codywagee
Currently looking at an acquisition opportunity that includes the biz + real estate. I know there's been a few threads on this... but too lazy to go track them down 🙃. Any opinions on whether biz + RE purchase or biz purchase + sale leaseback on the RE makes most sense? No… https://t.co/k1q57Unrai
1:36 AM ∙ Mar 10, 2023

This is a really great thread highlighting the differences between a search fund with investors and going all-in yourself…

Twitter avatar for @AZ_SMB
Derek Turner @AZ_SMB
After lurking on SMBTwit, I’d like to introduce myself: “Turncoat Search Fund Guy” I did a traditional search fund in 2017, bought in 2018, sold in 2022 2 mo ago, I turned my back on the SF model, signed a PG, and bought an SMB 7 BIG diffs btw “Search CEO” and “SMB Owner” 🧵👇
1:18 PM ∙ Mar 10, 2023

Might be a good opportunity for someone looking in this space…

Twitter avatar for @ClintFiore
Clint Fiore 🛩 🦬DM for Biz Deals @ClintFiore
🚨Need a Buyer immediately on our Houston area Electrical Contracting Biz. Seller unfortunately has a major health issue. -$945K Rev -$181K SDE -$550K Asking Price -Seller Financing available to good Buyer with down payment for quick closing
6:22 PM ∙ Mar 9, 2023
75Likes4Retweets

Working in the business prior to acquiring it is something I don’t hear a lot about. This is a really interesting view…

Twitter avatar for @BroknClok
Ken Otto @BroknClok
I’ve had a couple people ask me about the “work to acquisition” path that I’m on, so I thought I’d throw some comments on here. I feel like I’ve covered the “how” I got here in prior threads, feel free to reach out for more detail. 👇
3:06 PM ∙ Mar 9, 2023
21Likes2Retweets

Make sure you focus on the right metrics and levers…

Twitter avatar for @SteveWiesnerSMB
Steve Wiesner @SteveWiesnerSMB
When I was lining up financing for my SMB, I asked a lender about floating rates. Smart reply... "The biggest issue isn't your interest expense. The biggest issue is how your clients are going to behave in a high rate, recessionary environment." We may be about to find out.
11:36 PM ∙ Mar 9, 2023
8Likes3Retweets

Good framework for “people and ops” diligence…

Twitter avatar for @bentigg
Ben Tiggelaar 🟠 @bentigg
How do you diligence 'people' and 'culture' when assessing a business acquisition? Extremely important, hardly ever talked about: 🧵
Image
3:45 PM ∙ Mar 9, 2023
37Likes4Retweets

This looks like a great way to understand your employees better…

Twitter avatar for @birchard_tom
Tom Birchard @birchard_tom
Below is from one of my employees You can tell recognition is important to him Earlier this week, I shared some positive feedback from a peer, and then asked how he likes to be recognized...publicly or privately Love to use this as an ongoing leadership tool, not 1 time event
Image
3:35 PM ∙ Mar 2, 2023

The Silicon Valley Bank collapse is worth following. It may not impact you directly but it definitely impacts a lot of the software you use. This is a big deal…

Twitter avatar for @bhargreaves
Brad Hargreaves @bhargreaves
$SIVB closure & receivership is going to have a massive impact on the tech ecosystem. SVB was not just a dominant player in tech but were highly integrated in some nontraditional ways. A few things we'll see in the coming days / weeks...
5:28 PM ∙ Mar 10, 2023
1,362Likes424Retweets


🤔 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 - PrivSource helps you source deals and connect with transaction partners without ever paying a success fee.

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.

X5 Deals - Proprietary deal sourcing. They do the outreach and send you relevant, actionable deals directly into your inbox.

Import Dojo - a newsletter that sends eCommerce and Amazon FBA businesses for sale to your email inbox. They send deals each Wednesday at 9:00 AM CST.

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.

Cerebro Capital - Cerebro has a network of 1,500+ lenders who can provide debt financing for your acquisition, refi, etc. $500k minimum.

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.

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.



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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.

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