Just closed my first acquisition: here’s what I wish I had known

After about six months of searching and six months of diligence/closing, my partner and I closed our first self-funded search deal. I’m happy to answer questions in the comments, but for those of you who are just starting, I thought it might be helpful to just share some of the things I didn’t realize going into this:

1. It’s better to get to the point faster than just have conversations - At first, I tried to meet any business owner who fit our criteria, but I wasted a ton of time in unproductive meetings this way. Eventually, I made my first email tell people exactly what I was looking for and invited them to book a call if they wanted to sell. Surprisingly, this was more productive than beating around the bush.

2. You’ll probably need to educate your seller - I already own a business and I’ve been in startups for 10 years, so I took for granted that sellers would know how valuations work and what the sales process would look like. Unfortunately, most small business owners are not that sophisticated, so my partner and I had to do a ton of education work with each of them.

3. You can buy a business using SBA loans with a foreign partner - This is unique to my situation, but my business partner is based in Austria, so we weren’t sure if SBA would work for us. After a lot of back-and-forth with banks and lawyers, it was decided that so long as he was a 49% partner, we could make this work, and he can even share in the personal guarnatee.

4. The bank will not walk you through this - You’ll need to take ownership and drive the process. I assumed that once we found a deal and did our diligence that the bank would guide us through how to proceed, but this was not the case. We had to keep pushing the bank and caught several errors in their paperwork because they didn’t actually understand the deal at hand. I don’t want to throw this bank under the bus, but they’re one of the 10 biggest SBA lenders, so I’m going to assume this is not atypical.

5. Lawyers will slow deals to a crawl if you let them - In the last month, we had our lawyer, the seller’s lawyer, the bank’s lawyer, and the escrow company’s lawyer all give us feedback on the purchase agreement. Despite the fact that everyone agreed to the deal at a high level, there were a million little line edits to coordinate. We did our best to incorporate them all, but we eventually had to just put up a stop sign and let it go.

6. At the end of the day, the trust of the team you acquire is all that matters - Now that the deal is done and we’re in the trenches meeting the team, I realize that most of the financial and legal nitpicking is really secondary. If the team we’re now leading doesn’t trust us, everything we’ve worked for could easily go sideways and this could be a huge bust. Fortunately, my partner and I have been able to relate to and build rapport quickly, so I feel good about this part of the journey.

Like I said, questions in the comments are welcome. Happy hunting!