3 Hard Truths for people looking to acquire a small business.

October 05, 2023

by a searcher from Southwestern University in Houston, TX, USA

This post was something I put up on Twitter because of a story posted there (that's what's being referenced at the beginning) of a guy who had his deal die for reasons he is still trying to figure out.

This is going to seem harsh, particularly to the generations that aren't used to any suggestion that they shouldn't do something. Nonetheless, think of this as an old man trying to save the young some bad decisions, heartache, and pain.

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3 hard truths for people looking to buy small businesses:

What you see below is a common outcome in acquisitions. I don't know JustAnotherGuy (though Napoleon Bonapartay sounds like a fun guy), but it just reminds me of what I see in my coaching clients regularly.

Hard Truth #1: In small businesses acquisitions, the owner needs to like you (the real you). Which means they not only need the chance to get to know you, but that there are deals that won't be done because they decide that they don't like (hence, don't trust) you.

And you should absolutely pay attention to the voice in the back of your head saying, "This guy is a douchebag." If you don't like him - as a person - you don't want to buy his business.

Hard Truth #2: If you don't like people, you will be constantly banging your head against the wall in acquisitions. I don't mean that you have to be a friend to everyone you meet. I mean that if you can't find something interesting in just about any random person that you run into, that's a red flag.

Here's the test: Go to a random bar. Or airport. Or bus station. Anywhere that the public gathers. Not your regular haunt where they know you; some random place with random humans of all strata of humanity.

Then pick a random person and strike up a conversation. Do it again. And again. Assess the results of your 3 conversations.

Hard Truth #3: If you find conversation dies after about 2 minutes on average, you should not be acquiring small businesses.

Let me be clear: I'm not saying that you can't acquire companies. I'm saying you shouldn't. Because every problem a small business has is a people problem. And if you're not a "people person", you will want to shoot yourself daily if you happen to accidentally be successful in acquiring a small business.

Maybe get a partner who likes people. Maybe join a firm that you can stay in the back room of.

Not being the right person to be the "front man" of an acquisitions group isn't a judgement on your character. It's a question of suitability for a job.

Reply by a professional
from University of Southern California in North Palm Beach, FL, USA

What you write is at the top of my list when I am advising business buyers. And it's a shame you have to apologize at the beginning of your helpful information so as not to hurt somebody's feelings. Sadly, I've seen an endless stream of searchers falling flat on their face, and buyers making bad deals. They seem to be afraid of getting the advice they need when they need it because it might not confirm whatever they think is their best course. Worse, is they pick up anecdotal information from people who only have limited views into the dealmaking playing field, much of which suffers errors or omissions. Costly ones.

Reply by a searcher
from University of North Carolina at Chapel Hill in Raleigh, NC, USA

Underrated post. Agreed. Love the 'go to a bar test' paired with reflection afterwards. Ultimately all business is "selling" but small business even more so if you're at the controls. The other alternative (as you mention) is to find your operator/GM that is all of those things if you are not.

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