ENTREPRENEURSHIP THROUGH ACQUISITION - MY INSIGHTS FROM THE ZOOM MEETING
I was in the zoom call for about[redacted]minutes and I'm new to searchfunder and could not understand the model. And the guy did not explain it to me when I asked, so it is what it is. Let me share with you my insights from what they spoke in those[redacted]minutes.
- What is the model? They talk about running the business after you acquire it, and speaking to the clients and employees. And knowing how to find a business and run a business. Which they said finding a business is really hard. So if I'm spending all my time running the business, it's going to make my search impossible.
From how I do things is: If you are buying a sole proprietorship it is not a business that you are buying, it's a job. $1M dollars revenue and above usually have people, systems and procedures. When I acquire a business we look to keep management in place and the owner stay as the CEO for a[redacted]months transitory period, as he has the knowledge and experience running it.
The board will oversee operations, and ensure we have what we need to grow and help avert avoidable mistakes, but that is at a macro level, meaning my job is to find bolt-on supplementary and complementary acquisition targets to expand market share, market reach and limit the ability for a competitor to take us out of the market. So I can't get bogged down with details.
Providing lenders and investors the safety that this project is destined to succeed, not only that; there is someone 100% dedicated to growing and expanding the company. So maybe you guys are not looking to do a roll-up. But I am, and I know it's the smartest and most efficient way of getting involved into the M&A space, specially now taking into account the chaos COVID has created in the marketplace.
- If you don't follow the traditional searchfunder method they say that you think you are better than the rest. ( Show's closed-mindedness ).
- My Structure Follows Strategy: Not the other way around, meaning I'm able to be flexible when the time is needed. And not stuck to one structure that will allow me to run myself into the ground. The world and the market is ever-changing and we need to be able to adapt and improvise.
- NICE PPM: They said the word PPM plenty of times without going into details of what they look for other than it looks nice.
So that means I can bring a trashy deal as long as the PPM looks good? How about LOI's? I know a well structured LOI will get investors attention, after they see our great structures.
- They use the word interesting a lot, change it to profitable. Interesting is subjective to the person, but investors look for profitability.
- Investors want stability!!! Me running the business instead of focusing on growth will not allow that. That's why most businesses fail after the first 5 years, why? Cause they focus on the wrong things.
- Running a business is hard? Keep management in place, problem solved. With assistance from the board you will avert avoidable mistakes.
- Being an over-performer CEO? If most people are scared to pick up to phone or speak up, how good of a CEO will you make? Hire one who has been there and done that.
- Future pro-forma? It's a guess at best a lie at worst. We are in a pandemic with an unsteady government. You want to bet on a guess? Make your offer on the current financials, and once you buy the business: Clean the bottom 25% of under-performers, remove unnecessary expenses, bring in better management, better training.
You have to understand with the current management in place and owner who have been operating all those years, if the market stays the same will be able to keep producing at the current rate. But they are capped, that's why we bring in external advisors who have grown businesses to be able to breach that cap.
Becoming an industry expert? They talked about people wasting months researching and spread-sheeting to death industry information.. Bring in an industry expert, plus the owner of the business knows more than you. He's been in the trenches, stop wasting your time on things that don't matter.
Only thing you should know is that the higher the barrier of entry the better as it prevents massive competition. That will not affect you as you are buying a reputable business that has been there, not starting one.
If you are teaching people M&A, teach how to make sure not to fail. Which you are clearly setting them up for failure. If this is your model, well this is going to be stealing candy from a baby for me. Looks like there is no competition. Thanks
IF YOU ARE A BANKER OR LENDER OR INVESTORS, this doesn't apply to you. You have no interest in it, only thing you should be paying attention is when I send you an LOI because you can bet it's going to be a hot one.
And for the snowflakes, my bad for speaking up like a man.