What are the properties of an “enduringly profitable” business? (Intro)

by a searcher

1 month ago

Hi all,

I’m new to the forum and to the ETA world in general.

I’m a marketing exec for a national D2C manufacturer with a strong online presence. My core strength are in SEO and marketing ops, but I’ve been in a marketing management position for 3 years and I’m good at bringing people with the right skills together to build something great.

I feel like I’m ready to take my skills and apply them to my own business through an acquisition.

I read in the HBR book on buying a small business about the target being enduringly profitable. As I embark on my search, I’d love to hear from you pros on what the exact properties I should be looking for to help refine my search. 

As an aside, I’m currently preparing an LOI for a residential kitchen design showroom. Should I skip because it’s not currently operating on any recurring revenue? I believe I can build up the recurring revenue side, by working with fixer uppers and interior designers, but should I be looking elsewhere?

0 likes
54 views
3 comments

professional from Harvard University

^Searchfunder member‌, on your "aside," you should be very careful underwriting a business based on your assumption that you can build a recurring revenue stream the business doesn't have. The deal should (generally) make sense on its own terms, without assuming major changes in the future. Unless, you have a lot of experience in that specific industry and it's a shoe-in for you to accomplish (rare). If the deal makes economic sense, any "upgrades" you think you can make to the biz are cream on the cake.

Happy to chat and good luck on the search. --@----.com

1 month ago | like reply | 1 like

professional from Bentley College

An 'enduringly profitable' business typically has a few key characteristics: a strong competitive advantage, stable and predictable cash flows, minimal reliance on the owner for day-to-day operations, and opportunities for sustainable growth. A common saying is that you want the business to not be disrupted by Google or Amazon.

Businesses with recurring or repeat revenue streams are often desirable, but that doesn't mean one without it should be dismissed outright. For instance, if you have the marketing expertise and vision to build a recurring revenue model, as you mentioned for the showroom, you might be able to unlock significant value. It’s all about aligning the business's current state with your skills and strategy.

By the way, if you're looking for tailored advice or support to assess opportunities like this one, DueDilio has a great network of professionals who specialize in acquisition due diligence. https://www.duedilio.com

1 month ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Family office looking for traditional searchers

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Downsides of "buying a job" below 750k+ EBITDA?

6-7x for a Self-funded Search Deal?

Examples of self-funded searcher websites

Self Funded Acquisition: A few Things I Learned

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.