Good afternoon,

I’ve had several conversations with folks who responded to my survey a couple weeks ago when I asked what I should do with this business.

The conversations are fun and invigorating. Getting the chance to connect with folks like you is why I go through the hassle of writing this every week!

I think I’m on to something.

As a reminder, here’s the 3-5 year vision I wrote last year.

But… is this plan a waste of time?

I had a Twitter exchange that made me ask this question. Let’s get into that.

This Tweet bothered me

Real estate investors don’t look for 10 cap deals on Zillow.

Eligible bachelors don’t look for wife material on Tinder.

And first-time biz buyers shouldn’t look for home run acquisitions from brokers… right?!

Wrong (according to this tweet).

I actually see this take a lot, and I usually disregard it.

But this time it bothered me. I thought about it all week.

Why? Rafael is the real deal. He started and owns a holding company with several companies in Panama and the U.S. that collectively do over $100m of revenue. On top of that, he’s a certified Great Guy of Twitter.

He’s been generous to answer several of my questions over the past few months, and I’ve read lots of his writing. His stuff passes the sniff test.

So this strong take didn’t sit well with me, since it conflicts with my strategy.

(I will look at on-market deals, but 80%+ of my owner conversations are with off-market owners.)

This tweet gave me several of those man, am I sure I’m thinking about this right? moments.

Would I do well to heed Rafael’s advice and give up an off-market search?

I don’t think so. Here’s why.

I’m doing it differently (& sticking to my plan)

When I boil down my motivations, I realize I want to play a different game than most searchers.

My goal isn’t really to buy a business...

I want to collect the mismanaged gems, like:

• The Ecom businesses doing $300k of earnings that never “tried marketing,” sent one email to their customer list in 15 years, and “will close the business” if they don’t find a seller they trust to carry it on (and aren’t talking to anyone else about it).

• The blog on a dynamite two-word domain in a passion niche with $200k of earnings selling the niche’s equipment, no exit plan, and owners who said “You’re on our radar when it’s time to sell.”

• The website CMS with 120 customers, many of which have paid monthly for 15 years and an owner who said “no one’s ever asked me if I would sell.”

Deep down, I get more excited about building a network of these owners than jumping into the deep end on a business with an owner who’s name I’ve never heard.

It feels like I’m investing in an asset. It’s as if every owner outreach I make is squirreling away some money into a 401(k) and letting compounding do its thing.

Speaking to owners from brokers’ lists that land in inboxes of thousands of buyers across the country just doesn’t feel the same way.

And, yes, I hope and anticipate the timing will fit for an acquisition in the near future.

But, today, I consider that a secondary goal.

Maybe I’m tricking myself. Maybe searching off market is a waste of time, and my rationale is weak. But, for now, I’m enjoying the process I’m running, and I’m content with that.

If you’re not like me, and you need to buy a business soon, you should probably follow Rafael’s advice. He knows what he’s doing! 🙂 

This guy searched off market and got results

While wrestling with those thoughts, I read a tweet on the results of a full-blown off-market search strategy by Thomas Ince of LP First Capital. It’s an interesting look at what happens after a year of off-market searching.

Here’s the recap:

• Private equity group buying local service businesses within specific geographies

• 2,188 calls & emails

• Bought 3 business (.13% call to close rate)

The tweet includes a larger breakdown on the search numbers (worth a read if you’re interested).

This PE group is targeting businesses that are “hit up” often. These types of businesses are not a secret, unlike some of the businesses I’m targeting. There’s competition from buyers.

Still, they found success (3 acquisitions) in what seems like a strategy with room to optimize. That’s the upside of an off-market search.

The breakdown and full-funnel data awareness made me realize I need to do a better job of managing and monitoring my own data. I’m working on that and will report back.

Coming up

In addition to getting better data on my search process, I also said last week that I would share some of the businesses I’ve been reaching out to.

This update turned out longer than I expected without that info, so I’ll postpone that to another week.

I’m having fun. I hope you are, too.

Mike