Good morning!

I’m going to do an email in the next couple of weeks about the questions I get asked most. If you have a question on my process, plan, or philosophy, reply here and I will add it to that email.

I’ve had a busy week with back-and-forths with biz owners. I’m excited for this update!

Web development business

Two weeks ago I mentioned a promising web development agency I was talking to.

I’ve talked to the owner over several long emails. Here’s a quick recap on the business:

• Based in Virginia

• 2 employees

• Main business is new, custom web development ($15k/mo)

• Side business hosting Wordpress sites (80 clients)

The owner of this business essentially said: I can’t afford to retire off the sale of the business, and I don’t have another way to make money.

So, I had what I thought was a great idea: I buy the hosting portfolio only. He’d keep the agency, its employees, and his primary income source. I’d get what I was most interested in anyway: 80 clients on retainer.

There’s a lot of opportunity with his hosting contracts.

• 80 clients

• Charging $30-$60 per month

• Can execute work for all 80 clients over 1-2 days per month

My post-acquisition plan is simple:

• Partner with 2-3 Wordpress killers on Upwork (there are hundreds)

• Increase hosting costs

• Talk to clients to find other service opportunities. Offer more marketing-adjacent services (email marketing, graphic design, paid ads)

It’s not to be, for now. He’s simply not ready to sell.

We left the conversation amicably, and I imagine he’ll reach out in the next year as he thinks about it more.

I never try to be in a hurry with sellers. I’m approaching them cold and off market, with the hope that at some point I get the chance to acquire the business from a relationship, not a marketplace. No one reads one email and decides to part with their business-baby.

These things take time.

I sent a follow-up, handwritten thank you note, too.

This strategy is working

I got a call from a number I didn’t recognize. Ignored it then Googled the number. I quickly recognized the Google result as a business I targeted, and I called them back.

It went like this:

The people (husband and wife were both on the call!) on the other end were 80-somethings, owners of my favorite businesses I’ve found in the search so far.

It’s a 35-year-old business on a two-word domain that, alone, is probably six figures. As you might imagine, the website is really underoptimized in a premium, niche space.

We went on to have a 22-minute conversation. They vetted me as a potential owner and shared some high-level details on the business.

And then they abruptly ended our conversation to pickup an incoming call from a customer in California - ha.

I don’t know if I’ll get a shot to acquire this business in the near future or ever. But, it was really exciting to see my strategy resonate with owners of a fantastic business. It felt like I picked a lock.

My strategy, visualized

Here you can see my email history with this business. I started with a cold email in August, and didn’t get a response. After following up, getting rejected, and sending a hand-written letter, I finally got a call in October (referenced above).

This made me feel great, because…

There’s a giant, opportunity-sized hole in the market

Is anyone else going to find and work this lead?

Professional searchers ignore this type of business. A sub $1m EBITDA business just doesn’t fit the PE model (usually owner operated, too-small upside).

Amateur searchers don’t know where look for a business like this. So they’re stuck looking on Microacquire or Flippa, which is like buying investment properties on Zillow.

As for me, I’m content to carve out a niche in this network. A $300k EBITDA, 30 year-old EBITDA business with no innovation since ~2010…? That is what I consider the makings of a home run deal.

This call made my week because it shows this strategy works, and reconfirmed that I’m on to to something.

I write this weekly email because it helps me process my week and provides an outlet to connect with some great folks who are also interested in this stuff.

So, here’s a handy referral link if you want to share with a friend/sibling/parent/boss who thinks finding overlooked business online is cool.

Sorry, no enticing giveaways for now, ha!

Have a killer week!

Mike