Search Funder Community --
Long time reader, first time poster here.
In March I closed on a business, a commercial / industrial laundry business based in Denver, CO. I'm thankful to be an Owner/Operator, but the verdict is still out on whether I'm any good at it. Time will tell.
Having received uncommon support & thoughtful wisdom from many in this space, I'm keenly motivated to help other searchers win (particularly Colorado-based searchers, come visit me in person!).
Sept###-###-#### Started searching (fully employed as a W2)
Sept - Dec###-###-#### Reviewed hundreds of deals within 75 miles of Denver
Dec###-###-#### Found a great business
Jan###-###-#### Went under LOI
Feb###-###-#### Target business caught on fire
Mar###-###-#### Sellers backed out of the deal
Mar###-###-#### Closed the transaction
Apr###-###-#### Present - Operating
Search / ETA is Beautiful:
-We're in the Early Innings - Search is still the wild west (see oil wildcatters in the late 1800's), those reading this are shaping the market real-time
-The Community is Wonderful - Because Search is still an 'emerging market', this community is uncommonly helpful, encouraging, and shoulder-to-shoulder
-Fair Game - This market is a refreshingly equal playing field, where the brightest MBA's and the scrappiest 2.0 GPA's can both compete & win
-Hard Assets, Fast - Real estate and stocks are wonderful, but they take time... if you have the grit to own/operate companies, wealth generation is faster and a helluva lot more fun
Search / ETA isn't Perfect:
-We're in the Early Innings - There isn't a set formula to win in Search... reading this site, listening to the top Search podcasts, SMB twitter, talking with investors... the content can become a narrow echo chamber (you have to buy big, you should raise a search fund, you need to search nation-wide, you must search full time and quit your job, etc.)
-Investor Financial Terms Disparity - The rates and T&C's I've seen for search fund investors (and those claiming they aren't, but are) are not in parity with the value of owning the equity in small businesses at this point in time
-The Pond is Getting Crowded - Most professionals aren't cut out to run businesses (for every 5 searchers you interact with, 1 has the chops to buy, 4 kick tires), many on this site love the idea of buying a business but may be better off with a great corporate job (no shame in that)
10 Search / ETA Hot Takes From a Guy Still Figuring it Out:
1.) First Principles of Search - Only three phases: the search (no one is uniquely equipped, keep your head up and fight the good fight), the deal (high finance background people generally have an advantage here), the operating (veterans, mid-career execs, and old guys generally have an advantage here)... simple to diagram, tough to pull off
2.) "Buying Small" - Isn't always bad, a few years of hustle may be worth 2-3 turns on that SDE multiple (also, to be a top 5% earner nationally means you pull down about $250k... so why are we all trying to net $1mm year one?)
3.) Geography - Searching regionally can be as fruitful as searching nationally, you don't have to move to BFE West Virginia for that plumbing company
4.) Network / Buddies - There's some real magic in being in the trenches with other Searchers, sharing deals / stories / life - there are plenty of businesses out there and searching can be tragically lonely (I wouldn't have made it without ^ ^ ^ ^ ^ ^ and Greg)
5.) Get in the Water - It may be better to buy an average company (and even operate with average results for years) than to search for two years unsuccessfully
6.) Business Brokers - Some sell-side brokers are awesome human beings, and newer searchers tend to write-off brokers because of what they hear... assume the best of business brokers (For example, a few excellent brokers in the mountain west include ^ , Bill Scott, Greg Wills, etc.)
7.) Spousal Alignment - If you care about your spouse or your family, there's wisdom in explaining to your better half the risks, rewards, and idiosyncrasies of running a small business before you go all in and end up with one (this isn't discussed enough or in much detail)
8.) Survival or Privilege - Successful entrepreneurship often begins in two places: either backed-into-a-corner, fight-or-die stories (see first generation immigrants or those with significant childhood trauma) or people privileged enough to take a big swing and not go bankrupt (see Gates, Bezos, Dumpster Trump)... which are you? Are you either?
9.) Board of Advisors - Many investors require you to have a BOD, if not, it's a really great idea to stand up an informal Board of Advisors (made up of mentors or retired industry folks, super light requirements, honor them in the process, and treat their advice as if it came from a formal BOD)
10.) Eat While the Food's Hot - to borrow a marketing framework, the 'state of search' seems to be in the The Chasm, squarely between Early Adopters and Early Majority phases, meaning the current phenomenon won't last forever (buying small businesses could return to the same cadence of the 1990's within 5-10 years when the baby boomer generation finishes retiring or perishes)
Feel free to comment or reach out to me privately to discuss any of the above, and if you're in Colorado, I hope we can meet in person soon.