Reflections after 1 year of searching full time

searcher profile

August 03, 2022

by a searcher from University of Virginia in Red Bank, NJ, USA

Before I quit my job to search full time a mentor of mine told me that I needed to give it at least a year because deals take time. Now that it’s been a year, I wanted to reflect and share what I’ve learned. For context, I’m a spouse funded searcher so I’m fortunate to have living expenses and benefits covered. I’m also doing a geographic focused search, exclusively with brokers. Here's my big takeaways:

Its really really difficult to get ANY deal done I’ve made 5 offers, had one signed LOI that fell apart in diligence, and I’ve had 2 different sellers pull their companies off the market while we were negotiating a LOI. The amount of things that have to come together to get a deal done is incredible (buyer-seller relationship, price, industry, geography, financing, customer concentration, competent broker, etc). I’ve read so many success stories about people who complete multiple acquisitions in a short time frame; they make it sound so easy. I knew it would be hard when I started, but it's definitely harder than I thought. Massive respect to anyone who gets a deal done.

Your search criteria can (and should) change Before I began my search I spent a lot of time crafting my target criteria, knowing that staying focused would increase my probability of success. Two of my criteria were: 1) minimum $500k SDEs and 2) less than 3 hours away from my home. As I started to speak with brokers and sellers about companies 2+ hours away, it became very apparent to me that, given the importance of facetime and gaining credibility immediately post close, that distance was way too far for me. I’ve got 3 small kids at home and I didn’t quit my job to start a new career with a 2+ hr commute. I reduced the range to 1 hr from my house but was having a real hard time finding deal volume with $500k+ SDEs. I started poking around opportunities with $300k+ SDEs and that unlocked a lot more deals. My preference is to buy bigger, but I’d rather close a smaller deal soon, than continue to wait indefinitely for a larger deal. Changing your criteria isn’t a bad thing; it’s a sign that you are learning so I’d encourage you to revisit them every once in a while and see if they still make sense.

Search is so personal; don’t waste your time comparing yourself to others When I first started I used to get so jealous hearing about the searcher who picked up a $1.5MM EBITDA company for a 3.5x multiple after only 6 months of searching. What's not in that soundbite is that the searcher is 28 years old, single, and moved across the country for the opportunity. Would I love to close an opportunity like that? Sure, but that's not the life stage that I’m in. I wasted too much time in the beginning comparing my experience and my deal criteria with others and quite frankly it was a waste of time. There's so many personal decisions that come into play with a search; focus on you and your why and don’t get caught up keeping up with the Jones’.

This is not a solo pursuit ; your network is your lifeline I’ve been blown away by the Search / SMB community. I’ve met some really smart, amazing people over this past year and I’ve accelerated my learning 100X compared to when I was just kicking tires while at my W-2 job. Total strangers I’ve reached out to have been incredibly generous with their time and they’ve taught me so much from their personal experiences. I went to a SMB NJ meet-up locally and from that event there's 5 of us in a group chat that text daily about deals we are looking at, issues we encounter, etc. There's a limit to how much my spouse or my friends can take hearing about SMBs; but having this other outlet of friends to chat with on a regular basis has been a total lifeline. If you aren’t actively engaging with others and meeting new people every week, you are missing out.



So after a year, what's next for me? While I’m discouraged that I’m not close to completing an acquisition, the dream is still very much alive and my search will continue. I’m going to keep using brokered channels but also look to network with local attorneys and CPAs as a way to potentially increase deal flow.

If you are new to search or have been searching for a while and want to compare notes, feel free to reach out. I’d love to chat and give back to the community that has given me so much.

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commentor profile
Reply by a searcher
in Loudon, NH, USA
Jesse, your post resonated with me as it did so may others here. I find myself reading stories online of people hitting it out of the park with their first, second, third acquisitions. There are now holding companies sprouting up, some established one owning a ton of companies. I often find myself feeling like a failure compared to these people. But as you said, we're not all working with the same resources. Like you, I have kids. Five of them to be exact and I'm fortunate to be able to work from home and be present for their childhood. I know the names of their teachers, friends and have chosen to make my wife and kids my priority. I also live in a small State where the population is less than some metro regions so the number of typical SF target companies close to home is minimal. Most businesses are small and very owner dependent. In many cases, it's called 'buying a job'. Nothing against the success stories we all read about but what is often not shared in those stories is the sacrifices people make to get there. We also do not hear the stories of people buying businesses that fail, go sideways or otherwise push a searcher to their breaking point. No doubt these experiences should be shared as much as the 'wins' because anyone considering entrepreneurship through acquisition should go in to it knowing as much as they can about the downside risks as well as the upside, especially those who have more at risk.
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Reply by a searcher
from University of Ulster in Dublin, Ireland
There are so many variables and moving parts when you are trying to 1. find & 2. buy a business. You are correct to tailor that around your lifestyle as it's a long term commitment. I like to try to take the emotion out of the process - which is easier said & done ;) - think of it like, if you were going to spend $300k-600k-900k on a car, you sure would do your homework! This is what this process is, your homework, you are learning about your local landscape & businesses that interest you. You are getting to see under the hood of many businesses, learning & picking up tips, plays, strategies, talking to the entrepreneurs who built those businesses, understanding what works what doesn't, could something from business 1 work in business 10? This is an incredibly important time in your search experience, enjoy the journey - that's where gold nuggets are found! If you are looking for any deal flow advice, happy to bounce around some ideas.
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