Buying Smaller?

searcher profile

March 16, 2026

by a searcher from United States Naval Academy in Dallas, TX, USA

For a long time I thought I was pretty healthy, but recently I got a glucose monitor to learn about the effects of food. Turns out I ate pretty unhealthily; a few tweaks and results followed like magic. It was almost embarrassingly simple. It got me thinking about my search criteria and whether there are small tweaks to make in search that might be helpful. One of my longest held criteria is earnings size; I think I’m changing my mind on lower SDE businesses as a potential “get-on-base” strategy. There are just more of them which should raise the odds of acquiring any one. While compromising on size makes value proposition, revenue quality, and margin more important, I’d hope the increase in funnel volume would be worth it. Especially for those who have acquired companies below initial target earnings range: anything I’m missing in looking at buying and operating smaller businesses?
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commentor profile
Reply by a searcher
from Massachusetts Institute of Technology in Charlotte, NC, USA
There’s an argument to be made about management structure. An example is a 7 technician biz which struggles to afford their GM. This is the ideal buy bc the fix is easy, get rid of the middleman and go straight owner/operator or better yet, higher 2 more techs and make the most of the GM.
commentor profile
Reply by an investor
from Harvard University in Dallas, TX, USA
I bought a business losing $1m a year. #5 search fund of all time in the end. So follow conventional wisdom at your peril.
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