Hello all,

Before I left for the Main Street Summit last week, I told my wife I thought it could change my life.

Heck, I even tweeted the same.

With hindsight, I’m confident it will.

I went to school, talking to hold company owners from all over the U.S.

The experience multiplied my conviction and expanded my view of what’s possible.

Let’s get into it.

I’m doing my own thing

Most of the acquisition searchers I met looked a lot alike. Something like:

1. Thinks the space is feeling crowded with buy-side competition

2. SBA debt with a personal guarantee or traditionally funded by investors

3. Would love an HVAC/B2B Services/Manufacturing business at 2x EBIDTA tomorrow

To be honest, I was surprised to feel “niche” among this crowd. Many people found my approach to buying old internet businesses owned by old people different.

I heard that I was wasting my time building relationships with off-market owners but…

… I was affirmed by a couple of individuals running the same strategy successfully.

🤷‍♂️

One guy in particular purchased multiple (10, I think?) off-market businesses by building relationships with off-market owners on no time crunch.

From talking to him, here are a couple highlights that resonated:

1. Recently purchased a business after meeting with the owner for coffee yearly. 7th year was the charm. That’s patience.

2. Purchased a fencing contractor for $65k five years ago. It did $250k topline that year and will do $10m this year.

My takeaway: I’m doing my own thing. I don’t mind that I have some detractors. As long as I have some believers who’ve already been there and done that.

I’m on the right path, not the fast path.

Rapid fire: my top 10 takeaways from Main Street

1. Find a great business. Don’t compromise on this. They are out there for the patient person.

2. There are more great businesses than great searchers.

3. Many of the people I met are 15-30 years older than me. This is a game of compounding, so it’s exciting to think what this could be if I work on it for the next 30 years.

4. People are proud. You need them to work with you to close a deal. Pragmatism, pragmatism, pragmatism to get the deal done.

5. Everyone I met is trying to scale bigger, without exception. Why?

6. Trust is the governor over deal speed.

7. Wisdom is hard to come by, even in a room full of smart people.

8. I’m more risk-averse than I thought I was after talking to so many people who feel comfortable with PGs on massive loans with businesses they’ve outsourced to someone else.

9. I’m willing to wait for a deal that I love but eager to find it and get it done.

10. When you buy a business: shut up, listen, observe. Delay implementing your great ideas for 3-6 months.

Search update: two SaaS interviews

The deal search didn’t rest this week. I had two conversations with SaaS owners.

SaaS for HR managers

This one was a quick no for me.

The owners came into the conversation hot: talking about massive enterprises they serve, awards their product one, and their dynamic team.

30 minutes into the conversation, and I find the business is doing less than $100k of revenue.

I don’t write off a business doing less than $100k of revenue on its face, but if it comes with owners who are either delusional or make a living blowing smoke… that’s a no from me.

Employee testing software

This was a major step up from the previous business.

• Over 100 clients

• Includes military contractors, massive hospitals, state agencies

• $128k projected revenue in 2023 (down from $330k in 2019)

• Projected $85k owner earnings this year

• Owner wants 3x revenue

This owner really understood his business (he’s had other conversations about selling).

I like the parameters. Decent product, solid customer list in large and slow industries, neglected business (the owner decided in 2019 to go to full-time maintenance and stop growing).

I decided to pass on this business. I felt the deal wasn’t good enough to overcome some concerns I have about the technical lift required to grow the business.

It’s a desktop app installed at the user level across the organization (think: Microsoft Excel). The majority of recurring revenue is from servicing the application, so knowledge of the product and ability to service it is critical.

1x revenue owner-financed and I’m interested, but this isn’t a homerun deal for me as it stands.

Funny side note: I did a Google Hangout with the owner, and never saw more than the top of his head.

Here’s an actual screenshot of my view.

I’m taking next week off to celebrate Thanksgiving with family. So, I’ll see you in a couple weeks.

Mike