Take Five #029: Are rollups the most predictable way to get wealthy? ($10m-$50m)

Five takeaways we loved at Kumo this week

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What can you do with Kumo?

1. Browse 100,000+ deals from hundreds of brokers and every major marketplace, with 700+ unique deals added daily.

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Take Five #029: Are rollups the most predictable way to get wealthy? ($10m-$50m)

1. Mental health + entrepreneurship: unpacking the personal struggles of a searcher

David LaMore does a great write up on actions he’s taken throughout his search to keep his mind healthy and active:

Here’s how I define my growth mindset in the context of search funds:

• Striving for perfection is different from being perfect – Acknowledge your mistakes by forgiving yourself and focus only on the things that you can control

• Embrace setbacks – They do not make you a failure but instead provide an opportunity for you to learn and grow

• Make the traditionally dreadful tasks fun – Amp yourself up beforehand and then reward yourself for doing the dirty work

• Develop a sense of intellectual curiosity and open-mindedness in everything you do – Try to understand why people think and act differently than you do and see how you can incorporate that into your own daily life

From “Entrepreneurial wellness” by David LaMore’s Maverick by White Cedar

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2. “Why are rollups a reliable path to wealth?”

“If you are a good operator this is likely the most reliable way to get meaningfully wealthy. You’re not inventing new technology. You’re arbitraging multiples and operating companies better than other people do. That’s it.”

Connor Abene @ConnorAbene

The most predictable way to get wealthy ($10m-$50m) in my opinion is with rollups. Here’s what they are and how they work:

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3. How the EtA landscape will change in the next 5 years

Summary:

• Searchers find the model that fits their needs

• More capital will be invested

• More searchers will fail to acquire a business

• Deal size will grow

• The emergence of Investor Advisors, not just Investors

Justin Vogt @J_M_Vogt

As Entrepreneurship through Acquisition gains popularity, it will undoubtedly change over the coming years Here is a list of my predictions for how the traditional EtA landscape will change over the coming 5 years...

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4. A two week stint in acquisition entrepreneurship, for 10x money

Phil Crumm @pcrumm

Last year, I decided to learn more about acquisition entrepreneurship by getting some reps in. So I did–I bought/sold a SaaS business and 10xed my money in ~2 weeks of work. Here's what I learned from my accidental flip 👇🧵 (and props to @microacquire for making this doable!)

Phil Crumm @pcrumm

Now let's talk $. I bought this SaaS at a 2.1x multiple and sold it at 3.7x a quarter later. So how did I 10x my $? Leverage. Specifically, debt. I put about 10% of the purchase price in and financed the rest. Is it risky? Yes. Is it irresponsible? It doesn't have to be.

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5. How to work with the seller’s counsel:

“Your seller will always solicit feedback from their most trusted advisors, whether they are knowledgeable or not. This means you need to get ahead of the ball on potential issues with those advisors.”

BuySellSMB @BuySellSMB

Hey SMB Twit, we’re working on a deal right now and it’s about to blow up. - $1.4 revenue - $400K purchase price - 20 days on market (HVAC) Here’s a quick lesson for SMB buyers on working with seller’s counsel:

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