Hi,

I’m on a hunt to find what I call a homerun business and buy it on homerun terms.

My goal for the year, which I wrote about last week: make friends with owners of 12 such businesses.

I have two such businesses in my pipeline, and one more on the way (I’m not counting it until we meet face to face). So, call it 2 ½.

Here’s my progress tracker. I’ll keep it updated and stay accountable!

Education blogger

I reached out to a blog owner in July, and didn’t hear back. When I followed up in December, I heard he sold that blog — but he has another one (I wrote about it here).

We ended up on Zoom, and I’m really glad we talked. I like his business. Here’s what I found:

• Former teacher turned education blogger

• Makes $60k/year between eBooks and YouTube videos

• Email list of 15,000

• Very niche service and audience with a good reputation — in business since 2007.

The owner is making a career pivot away from blogging into… law school.

He was a very interesting, very sharp guy. That’s the biggest downside of his business. He knows what he’s doing. I don’t see tons of low-hanging fruit in this business. Maybe if I studied it more I would, but nothing that’s kept me awake at night with excitement.

I won’t qualify this business as homerun potential unless it comes with killer terms (like 1x earnings on majority seller finance) — which I have no reason to believe will happen.

He said he sold his previous business for 3x the Ad Sense revenue, which I thought sounded reasonable.

So, I’ll do my thing: keep in touch and build the relationship. He’s making a major career pivot, so who knows? Maybe he’ll wake up in a couple months and decide it’s not worth his hassle anymore.

Or maybe I find a friend who’s a better fit to buy the business than me and I can connect the two.

I’m mailing a thank you note to him this week.

Search process change

I’m a bottleneck in my search process, and it makes me slow.

Here’s my process:

1. VAs find leads

2. I research leads

3. I hold out my favorite leads (10-20%) that I see homerun potential in

4. I create a cold email to reach out to my favorites and manage follow-up.

The change I made this week was to jump straight to step 4. I asked Merry, my VA, to vet the leads so every lead I look at is worth contacting. Remember, I’m focussing on only finding gems, so I’m not doing a mass marketing campaign.

Thoughtful followers might be confused here:

Isn’t Merry the same person who found your leads in the first place? Shouldn’t the leads be already fully vetted?

Yes, but: most of the leads on my lead list are months old.

In short, Merry improved a lot at understanding what I’m looking for (as did I).

So, instead of me reviewing her leads this week, I asked her to review her own leads and reserve the most promising for me.

I recorded a 15-minute Loom video walking through each of her reviews and providing her feedback.

This is hard because it’s almost 100% a judgment call! There isn’t a perfect, black-and-white rubric to follow.

But Merry seems to get it.

So far, she’s made great decisions. Once I’m confident we’re on the exact same page, I’ll stop researching leads that aren’t pre-vetted, which will alleviate one small, frustrating inefficiency in my search process.

All-time great read

Many acquisition entrepreneurs treat Warren Buffett’s writings like their field bibles.

I’m personally working through all of Buffett’s shareholder letters — I’m in the late 1970s right now.

But I read something this week that struck me more deeply than anything I’ve ever read from Buffett (no disrespect to the GOAT): Permanent Equity’s annual shareholder letter.

Brent Beshore outlines why the market to buy SMBs is significant and inefficient, and why the incentives to do so lead the most successful further up the M&A ladder and onto bigger deals. In turn, this leaves many wonderful, “too small” businesses overlooked.

I believe this with my whole heart and think the same dynamics apply to even smaller businesses ($500k-$1m EBITDA) — and maybe even more extremely.

That’s what I’ve spent these email updates exploring, as you know.

It’s the reason for owners telling me they might just close down their $300k EBITDA business rather than list with a broker (or that they already did close down their multi-million dollar SaaS business!).

I can’t recommend this letter enough. I’ve read it once and will probably read it many more times this year.

Onward!

Mike