Multiple acquisitions - rolled under 1 roof

December 06, 2019

by a searcher from Texas Tech University in Dallas, TX, USA

Howdy,

I am an entrepreneur looking to operate several small businesses. My plan is to acquire several small to medium size businesses that are within the same industry to cross sell items and grow the business and sell at a future date.

Here are my characteristics for business types • Total revenue would add up to be in the range of $3-5M • Each business would be generating $350k-1.2M in revenue • In a non-volatile, "boring" industry • Owner stale or looking to make an exit • Consistent Cash flow • Businesses primarily with online or with little###-###-#### brick & mortar

I'm looking to connect with anyone that has ventured down a similar path to share wisdom or advice.

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Reply by a searcher
from New Bulgarian University in Walnut Creek, CA, USA

In my experience, this strategy is less likely to succeed than focusing on a single business. I've done this twice - in entertainment and in fintech. In both cases, one of the businesses was a lot more demanding (of my attention) than the rest of them. The problem is that is not necessarily the business with the highest potential. But because it's getting most of your attention, it begins generating the most of your income and you may delude yourself, that you are devoting your attention to it, because you're most profitable there. And in fact you may be generating 10 times more with another one of your businesses if it was getting the same amount of attention.
Running any business is hard and requires the CEO's full attention. Be it a tech giant or a local pizza restaurant.

Reply by a searcher
from Stanford University in Salt Lake City, UT, USA

I'm considering a similar strategy. From my POV, a major consideration is the owner's degree of involvement in the business. It would be relatively straightforward to combine businesses that are run by the owner PT--but significantly more challenging if each business is run FT. In today's economy where it is quite challenging to find good talent at a reasonable salary, I'd be cautious to assume that you can just hire a manager to run the nitty gritty daily operations that the owner is likely doing today.

I'm curious to get ideas/perspectives on how to leverage our time such that we can simultaneously operate multiple smaller businesses. Feel free to reach out to me at redacted if you want to brainstorm with me!

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