🧐What I Learned Last Week

Curated M&A content for week ending Friday, January 13th, 2023

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

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Hello Friends!

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

DueDilio is a leading online marketplace focused on M&A due diligence.

We connect business buyers, sellers, intermediaries, and private investors with pre-vetted due diligence service providers.

Our large and growing network of verified independent professionals, boutique and mid-size firms, and subject-matter experts specialize in finance, technology, legal, commercial, and other key areas of business diligence.

Submit your project. Review qualified proposals. Hire service provider.

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📰 Articles

Search Investment Group (SIG) released their much anticipated self-funded search study with self-reported data from over 250 searchers.

👉 2023 Self-Funded Search Study

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XO Capital published a quick post about the realities of cash accumulation.

When we started two years ago I naively thought I'd read enough Twitter threads to understand that basically all we needed to do to win was:

1. buy good businesses (hard)

2. accumulate excess cash (hardest)

3. redeploy that cash (harder)

However, we now have two years of operating history and here's the reality:

1. Our largest inflow of cash was from selling a business

2. Our second largest inflow of cash was from an enterprise sale of an enterprise SaaS which we have since concluded is not the right type of micro business for us to own.

3. The rest of the months were roughly break even or operating at a slight loss.

👉 Cash Accumulation

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Middle Market Growth writes about the changing deal terms due to the tightening lending environment.

👉 No Uncertain Terms: Shifts in Key Deal Terms Ahead

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Meera Clark is an early-stage investor at Redpoint Ventures. She published a collection of charts that highlight the state of the economy and consumer for 2023.

👉 The 23 Consumer Charts to Chew on for 2023

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MidStreet M&A wrote an educational article about adjusted EBITDA and add-backs. It’s a helpful read for those analyzing the financials of a business.

Adjusted EBITDA is a metric of a business’s earnings that starts with net income and adds back interest, taxes, depreciation, and amortization expenses, along with non-recurring and discretionary expenses in order to give a clearer picture of a company's earnings.  

👉 Adjusted EBITDA: Add-backs and Common Errors

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DueDilio just published two case studies highlighting real-life success stories.

👉 Instant ROI With a $1.2M Tax Credit in Post-Acquisition Due Diligence

👉 A First-Time Business Buyer Saves $200K–With Help From 3 DueDilio Professionals

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🧵 Twitter

Know what to expect…

Kriss Berg @KrissBergTweets

🚨🚨 THE FIRST 60 DAYS AFTER BUYING A BUSINESS 🚨🚨 A lot of talk about the buying process, what about right after you close?? *gulp* I've bought 8 businesses, here are some lessons for 1st time buyers from the school of hard knocks...

Love these tax/finance tips…

Ankur Nagpal @ankurnagpal

My 7 favorite tax strategies for business owners: Most entrepreneurs are too busy working on their company to think about their personal finances Here's a quick checklist of stuff that can end up saving you massive amounts of money:

Great thread summarizing some of the data…

Ben Tiggelaar 🟠 @bentigg

The 2023 Self-funded Search Study surprised me in a few ways 👇 What surprised you?

Good reminder that it’s OK to overpay for a great business. Valuation isn’t everything…

Jacob Williamson @jacubwilliamson

I think people get too caught up in #SMB multiples. Don't get me wrong, they are fun to look at but you should be looking at: Debt serviceability (DSCR) Rev growth over 3 years Solid/consistent gross margins Industry outlook I'll pay 20X if it pencils!

This is the playbook…

Thomas Ince @thomasince

A couple of people have asked me recently how we buy so many businesses. We closed 20 last year and plan on closing on 9 this quarter and 40 this year. Here are 🔟 thoughts on how we pull this off, which has principles that you can apply to buying your first business 🧵👇

Position your business for sale from the start. Lessons apply to many business types…

Flippa @Flippa

How do you build an Ecommerce business with the goal of exiting? @Travis_Jamison outlines the areas to focus on if you’re building an Ecommerce store and intend to sell your business down the line 🧵

$50k worth of value right here…

Neel Parekh @NeelBParekh

I spent $50,000 on business coaching so you don’t have to. Steal my learnings [Mega Thread] 🧵 👇👇👇

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🤔 Thoughts, Events, Other

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🛠 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 - Proprietary deal flow, deal aggregator, and exit prep.

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.

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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.