6 Lessons from 6 Months of Search

I recently wrote a personal reflection on the 6-month milestone of my search and thought I'd share with the Searchfunder community.

I am a self-funded searcher currently doing a limited geographic search, so everything is written from that perspective. I've included a "TLDR" of the 6 lessons below, but for those interested to dig in you can access my full write-up here: https://drews-newsletter-771f01.beehiiv.com/p/six-lessons-six-months-search

Here is the TLDR of the 6 lessons:

1. Pick up the phone.

The more you pick up the phone and speak to brokers, business owners, lenders, CPAs, lawyers, and investors:

- the better you get at telling your story,

- the more deals you see,

- the more owners you talk to,

- the more feedback you get, and

- the more confidence you gain.

2. It’s OK if your acquisition criteria evolves. Expect it to change as you get more experience.
- You will NOT find the “textbook perfect” small business.
- As you see more deals, you’ll start to get a feel for what criteria you want to change. Take action – nothing forces you to learn quite like experience.

3. Industry matters. You shouldn’t be completely agnostic.
- Industry selection matters - especially if you are using debt. You can’t escape certain industry dynamics like cyclicality, average payment terms, and capital intensity.
- Understand your personal strengths and weaknesses. The industry should match your skills, interests, lifestyle, and experience.

4. If you want to win deals, you MUST move fast.

- You should communicate valuation early. Don’t be afraid to make an offer fast. I didn’t initially use an indication of interest (IOI) because I felt like it was overkill, but I started using them now and have seen good results because it lets me get valuation discussions out early in the process.

- To move faster, use tools like Kumo to see deals right when they come to market, build a simple financial model you trust, build a template IOI you can use to get valuation out early, and have some comparable metrics / comps you can use that are specific to industries you are targeting.

5. Authenticity wins over generic “carry your legacy” pitches.

- Seemingly everyone looking to buy a business is saying they will “carry on the owner’s legacy,” and “shepherd your company through its next stage of growth.”

- To stand out with an owner, you should be authentically you and approach them with genuine curiosity about their history with the business, their goals, and what they care about.

- Owners can tell a difference between someone rattling off a set of prepared questions vs. having a genuine conversation with them.

6. Searching for a business to buy is tough– be prepared with a peer network and prepare your family.

- I highly recommend developing a network of peer searchers, investors, lenders, and others experienced in the ETA community.

-I can’t emphasize enough how important it is to have candid conversations with your spouse about what you are signing up for. I could NOT do this without the unwavering support I’ve gotten from my wife.

Conclusion

I recognize there are many of you in the ETA community who are far more experienced than me. I'd be happy to get any feedback you have - even if it's because you disagree with some of my thoughts. After all, I haven’t successfully acquired a business yet!