Take Five #157: “8 Common Deal Sourcing Challenges and Solutions,” and more
Top five must-reads this week in the world of SMB acquisitions and operations
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Take Five #157:“8 Common Deal Sourcing Challenges and Solutions,” and more
1. Freely assignable property leases can make the SMB acquisition process a lot easier
2. “8 Common Deal Sourcing Challenges and Solutions”
Acquiring a small business worth $1M–$25M is tough. Deal sourcing comes with many challenges, from finding quality leads to managing limited resources. Here’s a quick summary of 8 common challenges and how to tackle them:
Finding Deals Across Multiple Sources: Use deal aggregation tools to centralize listings and simplify your search.
Improving Deal Quality: Set smart filters based on financial, operational, and strategic criteria.
Setting Clear Buy Criteria: Define industry, location, size, and financial parameters to stay focused.
Speeding Up Due Diligence: Use structured workflows, templates, and AI tools for faster evaluations.
Standing Out in a Crowded Market: Build strong broker relationships and act quickly on opportunities.
Managing Deal Information: Organize data with centralized platforms and automated tracking.
Strengthening Seller Relationships: Communicate clearly, address concerns, and plan smooth transitions.
Maximizing Limited Resources: Leverage automation, AI, and aggregation tools to save time and effort.
These strategies can help you streamline the acquisition process, improve decision-making, and close more deals efficiently.
Read the rest of Kumo’s post here.
3. How to structure a business so it’s easy to exit (even if you’re not selling)
4. Non-competes and non-solicitation agreements explained
Non-Competes in Business Acquisitions vs. Employment Agreements
Non-competes generally appear in two contexts: business acquisitions and employment agreements. They are not the same beast.
While all states permit non-competes in business acquisitions, not all states permit non-competes in employment agreements. And many states have much tighter rules on permissible employer-employee non-competes than those that apply in small business M&A.
There are a number of reasons. Most forcefully: business acquisitions involve the transfer of goodwill; courts routinely hold that it would be fundamentally unfair to permit a seller to destroy the goodwill of a business that she has just sold.
That justification doesn’t apply in the employer-employee context.
You may have heard of the FTC’s attempt to ban non-competes?
That addressed non-competes in the employer-employee context. It did not apply to non-competes in the M&A context.
Read up on it for fun, by all means; it won’t impact your deal making.
Negotiating a Non-Compete
If a seller pushes back against a non-compete, take a pause and ask why.
Is there room to disagree over the scope of a non-compete? Yes. The reasonableness standard invites that debate.
But why?
The primary reason a seller will push back is because she wants to keep her options open. She may want to jump back into the game in a couple of years. Perhaps she plans on retiring but is worried that she’ll find it boring.
Whatever the reason, this is generally a red flag.
Read the rest of the smb-transactions.com article on non-competes here.
5. ETA success story featuring boomer burnout, a declining business, and a persistent buyer, plus some plot twists and a solid payoff in the end
Loved what you read? Subscribe to Take Five to get our top quick reads every week from the team at Kumo. Kumo aggregates thousands of sources into one easy-to-use platform so that you can spend less time sourcing, and more time closing deals.