Take Five #040: How one pro bought 20 businesses last year, and plans on acquiring 40 more this year
Take Five #040: How one pro bought 20 businesses last year, and plans on acquiring 40 more this year
Five takeaways we loved at Kumo this week
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Take Five #040: How one pro bought 20 businesses last year, and plans on acquiring 40 more this year
1. How a pro buys businesses at scale: 20 last year, and 40 more this year
2. The Emotional Roller Coaster of First Year SMB Operations
Two former PE folks on their Year 1 of buying an artificial turf installation business in February 2022, and their learnings:
While SMBs are certainly more volatile than large companies, it’s really the perceived volatility that makes especially the first few months such a roller coaster. Without the experience from prior years and without any historical data to rely on, the ups and downs get blown out of proportion, because there is no objective telling how good / bad something is. It’s like a three year old toddler learning that a little stumble and a big fall are not equally grave - hard to figure out without prior experience / data to compare it to.
However, just like the toddler, you eventually take enough tumbles and falls so not every slow lead days feels like your product/service might be obsolete and not every good week makes you feel like you’ll take over the world.
There are two clear lessons from year one:
Start tracking important KPIs as soon as possible. Use Excel and paper if you have to, but don’t wait months to implement the perfect solution. This data is the only crutch to lean on when the first bad day / week inevitably comes.
Prepare yourself for the roller coaster by understanding that you will likely have outsized emotional reactions, building a peer group to keep you sane and structuring your deal with enough liquidity runway out the gate.
From “The Emotional Roller Coaster of First Year SMB Operations” by Buy Small Sell High
3. Two perspectives on SIG’s 2023 Self-Funded Search Study
Last week, SIG released their 2023 Self-Funded Search Study, which has been widely discussed in the search/acquisition space.
8 things Ben Tiggelaar found surprising about the study:
And a few favorite findings by Will Smith of the Acquiring Minds Podcast:
4. How to figure out if someone's a motivated off-market seller or not
5. Day 1 of SMB Operations: we’re upgrading all the processes to be tech-enabled… right?
Some thoughts on how to actually implement this thoughtfully (and maybe even slowly):
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