Listen to This Blog Post Over the past few months, I’ve been presented with five separate opportunities that contemplated the acquisition of a company with $7M or more of EBITDA (this compares to the Search Fund average of $2.2M for the 2022-2023 cohort of Searchers). While I acknowledge that five data points don’t constitute aContinue reading “Are Search Funds Moving Up Market?”
Category Archives: Buying a Business
Hard to Kill: A Four-Part Framework for Evaluating Small Business Acquisitions
Listen to This Blog Post I would make the world’s worst Venture Capitalist. If you don’t believe me, keep reading. As I’ve transitioned from operator to investor over the past 5 years or so, I’ve attempted to develop (and have attempted to articulate below) a general philosophy to guide my decision making, given that almostContinue reading “Hard to Kill: A Four-Part Framework for Evaluating Small Business Acquisitions”
Rethinking Asset Intensity in Search Fund Acquisitions
Listen to this Blog Post The vast majority of Search Funds seek to acquire businesses that are both “asset-light” and “capital-light”. That is, companies that don’t have a large base of tangible assets that need to be added to, refurbished, or replaced to either maintain operations or pursue growth. All else being equal, this makesContinue reading “Rethinking Asset Intensity in Search Fund Acquisitions”
How to Price, Structure, and Diligence Around Customer Concentration
Listen to this Blog Post When evaluating a small business to acquire, to suggest that some form of concentration is common is likely an understatement. Indeed, in most cases, concentration of some variety is a borderline inevitability. Though this often takes the form of customer concentration (the focus of this blog post), it can takeContinue reading “How to Price, Structure, and Diligence Around Customer Concentration”
Evaluating The Most Common Forms of Debt Used to Finance Small Business Acquisitions
Listen to this Blog Post Though it is correct to suggest that all acquisitions are funded through some combination of cash-on-hand, debt, or equity, it’s also a bit of an oversimplification. Indeed, the financing options available to prospective acquirors are numerous, and in today’s blog post, I focus specifically on debt, and evaluate the fourContinue reading “Evaluating The Most Common Forms of Debt Used to Finance Small Business Acquisitions”
Why You May Want to Reconsider Your Industry Roll-up Strategy
Listen to this Blog Post In its simplest form, a “roll-up” or consolidation thesis would see the acquisition of a single (often larger) “platform” company, to be followed by subsequent acquisitions of other (often smaller) “bolt-on” companies within the same industry. The industries in which this thesis is most prevalent tend to demonstrate the followingContinue reading “Why You May Want to Reconsider Your Industry Roll-up Strategy”
Answers to Recurring FAQs from Current and Prospective Searchers
Listen to this Blog Post Over the course of many years speaking with current and prospective searchers on a near-daily basis, I’ve come to appreciate that many searchers understandably tend to have very similar questions and areas of uncertainty. Indeed, in most instances, I had these very same questions and areas of uncertainty myself priorContinue reading “Answers to Recurring FAQs from Current and Prospective Searchers”
Questions You Should Be Prepared to Answer Before Buying (or Selling) a Small Business
Listen to this Blog Post It likely goes without saying that every transaction is different: Every company, industry, searcher, and investment opportunity presents unique considerations that in turn give rise to unique questions and areas for further due diligence. With that said, over many years of evaluating countless acquisition targets alongside searchers, I’ve found thatContinue reading “Questions You Should Be Prepared to Answer Before Buying (or Selling) a Small Business”
Venture Capital “Orphans”: Exploring an Emerging Search Fund Investment Thesis
Listen to this Blog Post Since their inception in 1984, Search Funds have largely targeted a very particular profile of company: Targets tend to be mature, enduringly profitable businesses with recurring revenue profiles, low capital requirements, and straight-forward operations. These businesses are often still run by their founders, and these founders tend to be laterContinue reading “Venture Capital “Orphans”: Exploring an Emerging Search Fund Investment Thesis”
The Merits, Risks, and Possible Unintended Consequences of Earn-Outs
Listen to this Blog Post When acquiring small to medium sized businesses, buyers often utilize a tool called an “earn-out”, which is a form of contingent consideration that sellers may receive at some point in the future in addition to the cash that they stand to receive at closing. Though earn-outs can be useful andContinue reading “The Merits, Risks, and Possible Unintended Consequences of Earn-Outs”