What I'm thinking about this week
I like doing hard things. I also like winning. I want to do both. Here’s how you can win with less effort and more results.
Some are still waiting on the sidelines thinking they need to “make it” before they take their taxes and their investments seriously. They don’t have “enough” yet.
Most people like surprises. I don’t but most people do. People like happy surprises like winning an award or a surprise birthday party. What if you doubled your company revenue overnight and it accelerated it’s profit?
If you already run a business, buying another one is one of the fastest ways to grow. You skip the slow part. You inherit revenue, customers, and a team that already works. I just got access to over 1,000 off market business for sale across the US, most of which are home service related.
What's in this issue
Off-market acquisition market and what that means for owners looking to grow.
What makes an off-market deal different from a broker listing, and why that difference works in your favor.
A quick way to get in front of us if you're thinking about buying or selling.
Deeper Dive: Why the real activity is happening off-market
Most owners think growth by acquisition means outbidding someone else for a business that's already listed. That's not where the activity actually is.
Owners who are ready to sell are having private conversations with a small group of trusted buyers, long before anything reaches a broker. Maybe it’s even just you.
It's not the buyer with the biggest checkbook. It's the buyer who showed up early, built trust, and was already in the room when the seller decided to sell. This is true for business brokers, private equity and you, if you so choose.
I’m seeing more of these conversations happen every month, and most owners have no idea they're missing them.
The conversations we are having in the room of 7-9 figure companies who are looking to optimize what they have and acquire their growth, are happening in real time. Here is a link to join the community of other business owners wanting to do the same.
We also talk through taxes for when you need it and planning an exit in the future so you have it.
Buying beats building: things to watch out for
When you’re looking at buying a business to accelerate your growth you also need to consider if you are going to use your business financials, your personal financials or a combination of the two. Maybe do a personal note to pay yourself back? Bonus poitns for creativity, but does it actually help you accomplish your goal?
Buying a business skips the slow part. You get revenue, a team, and customers on day one. Vetting the company well enough to know what you’re getting is worth what you paid. But moving fast on an off-market deal comes with its own blind spots.
There's no bidding war, so there's also no market check on price. You have to know the number is fair and need to move quick. Just like in wholesaling real estate, need to be ready.
Sellers who are eager to sell are looking for more than just a price, they are also looking for certainty and care. The more options you have to close vs. compete gives a higher chance of winning.
The financials aren't packaged for you. You're looking at how the business actually runs so due diligence matters more here, not less.
The deal moves at the seller's pace. That can work in your favor especially if they are looking for a quick and streamlined sale.
Nobody else is watching. No public listing means no outside pressure, which is good for structuring the deal right.
Before You Buy: A Decision Framework
Before you chase a deal, run through these questions.
Is this business good, or is it just cheap? A low price on a struggling business is not a discount. It's a warning label.
Can you actually run it, or are you buying a job? Some acquisitions grow your business. Others just buy you a second full-time job with worse margins.
How much of the value walks out the door with the seller? If the business depends entirely on the owner's relationships, you're not buying a business. You're buying a transition problem.
How does the structure affect what you keep? The same purchase price can produce very different outcomes depending on how the deal is structured.
What happens if the deal falls apart? Every acquisition looks great on the term sheet. Ask what the downside actually costs you before you're in it.
Who is running this? Will you be leading the transition or have you curated a team or a team member to spearhead.
BEFORE YOU GO
Growth through acquisition is that next level to take off market business and grow your company. Keep in mind it’s not just increasing it’s also expanding. Cross sells and upsells can drastically change the trajectory of the business and even your involvement in day to day operations. You might now have the funds and ability to hire a COO or integrator with the new found acquisition.
Bring your curiosity. You never know what’s on the other side. Reach out if you need to talk about taxes, exits and growth through acquisition. There’s still time this year.
Looking to grow alongside other entrepreneurs?
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— Paul H. Graham