I've been spending a lot of time thinking about deals lately through a lens that I keep returning to as my top priority analysis tool - that is the lens of fundamental demand or, what I like to optimistically call the tailwinds. The basic rationale for this goes as follows. Searchers have the freedom to pick the market to enter. No matter what business a searcher enters, operating is going to be tough. People will be difficult. Competitors will want your customers. My prevailing thought then, is to do yourself a favor and let the market work for you by finding a business where immutable forces create tailwinds that overwhelm any headwinds or uncertainties. Then the operating strategy can simply be to put up your sail and execute with the tailwinds propelling you forward. The prudence of the tailwinds thesis is well documented by McKinsey's The Granularity of Growth, though the implications are somewhat different when applying their ideas, which were formulated for large enterprise corporate strategy, to search acquisition. Nevertheless, I think the principles and insights translate. Find where the growth is at a very granular level, and simply be there. Don't put yourself in a zero sum market share game.
To do quality analysis of tailwinds (and headwinds), it requires letting go of your industry priors (and sometimes turning off exclude filters on your searches and reading deal packs that you think you will hate!), and getting past the surface-level labels used to characterize a company and its services. You need to actually dig in to the details of the offerings, geographies, customers, purchasing motivations and behaviors, and unfulfilled opportunities. It is simply not enough to look at a business and make the assessment based on the industry it's in or the labels used by the broker. That's how you will miss fantastic opportunities that everyone before you also missed.
Connect to me here on Searchfunder if you want to chat about your self-funded search. I appreciate hearing from people doing unique and thoughtful work in ETA. Please add examples in the comments if you have them!