Four Questions to Ask Yourself as a Searcher

I’ve been shocked by the ongoing explosion in interest in all things search/ETA/small business. I first invested in a small business acquisition deal in November 2019, and then acquired my own small business in February 2022. When I bought my business, it felt like Entrepreneurship Through Acquisition (“ETA”) was exploding, and potentially peaking. I had no idea the next few years would feature one-directional growth in interest — just up & to the right. This was all in the face of rising rates making acquisitions much harder. When I closed in Feb 2022, my Prime+200 loan was an all-in 5.25% interest rate. It then peaked at 10.50% in July 2023, and sat at that level until September###-###-#### That was a painful time for most small business buyers who had used floating rate debt. And yet, over that same period time, this blog’s subscriber count grew from ~1,500 readers to nearly 7K. I don’t know what to make of that. But as I think more deeply about the searchers & business owners I’ve interacted with, I realize that subscribing to a blog about search is easy. Listening to podcasts is easy. Actually closing on an acquisition is much harder. There’s a very natural funnel from “kicking the tires” on search, to actually searching, to going under LOI, to getting a deal closed. I have no clue what the drop-off at each stage actually is, but based on purely anecdotal evidence, my gut sense is that fewer than 1% of prospective searchers ever end up closing on an acquisition. Call me jaded, but that seems like a very high ratio of interested folks relative to closed deals. So, where am I going with this depressing little diatribe? I think there are two “bad” outcomes in search: 1. You spend a ton of time & money searching, and never close. 2. You do close on a business, but it’s a bad deal. #2 is the obvious bad outcome most people focus on — most of my blog is focused on helping searchers figure out if they’re buying a good business or not. But today, I want to discuss #1 — the serious searchers who never get to the finish line. Let me be clear — I think tire-kicking is totally fine! ETA is a fascinating path worth exploring. Being a prospective searcher is great — hit up some listings, sign some NDAs, talk to some sellers. Before you quit your job or start dedicating more than 15 hours per week to the undertaking, your downside risk is truly low. But for the searchers that get serious, perhaps even get under LOI but never close…that could now represent###-###-#### months of hard work and $25-$50K in burnt deal expenses. That’s painful. So today, I want to present you with four self-reflection questions — answer these honestly for yourself. I hope these aid you in either short-circuiting your search before you’ve wasted too much time & money, or provide renewed vigor to dive into search. ------------------------------- This is the lead-in to my latest blog post on Big Deal Small Business, a search & SMB-focused blog that I've written to support the ETA community for 4+ years. The full post is available (no paywall) at my Substack site. Will post the link below in the comments.