What it takes to get an LOI signed - stats & learnings 1 yr into search

Intro - why I wrote this post

About a month ago, I hit a high in my search. I finally was under LOI for a $1.5M EBITDA wellness deal here in DFW. It took me ~10 months, 2 cohorts of 5 interns, 5K+ custom owner emails, 100+ initial conversations with interested owners, and 10 written offers to get to a signed LOI.

Last weekend, the seller terminated the LOI. QoE (phase I) just finished and everything was looking good. So what happened? The seller became flaky and blamed not fully understanding the LOI terms, specifically the deferred revenue/gift card liability clause. Impact on the purchase price was a couple of hundred Ks, and I had warned him that is likely what we will find during QoE.

As I reset my search and kick my second year into gear, it is the perfect time to reflect on what I have learned so far. I am confident that my second year will be more productive than my first, here are some of my learnings and reminders to myself.

Context on search parameters and Mighty Acorns Mission (I am self-funded solo searcher): *Focus is on DFW, B2B services companies between $750K and $2M in EBITDA, ideally services with a skilled frontline (think technicians, clinicians or even salespeople). *Mighty Acorns mission: Grow a Mighty Acorn into a Grand Oak, lasting many generations. Ensure the seller gets to enjoy the fruit of their labor.

Key stats to get me to the signed LOI • Officially started Mighty Acorns capital on Oct 7, 2022 • Q4 of 2022 quarter was slow for me (I sourced a few leads but no offers), Jan-May 2023 I sourced 50 leads and May-Aug I sourced 60 leads. • Proprietary outreach (85% of my time): sent 5K emails, got ~300 responses resulting in 100 initial owners conversations and 4 written offers • Brokers (15% of my time): reached out to 100 brokers (phone + email), reviewed 400+ CIMs, wrote and lost 6 offers even though the majority of them were at 5x EBITDA multiple or higher (deals between $1-3M in EBITDA) About 10 deals remaining in my pipeline: timing was not right, to follow-up on periodically