I don’t really have much of a morning routine. I just wake up, start working until I get a bit hungry and then have breakfast. I do this pretty much every day.
Searching Acquire every day is probably the one habit I stick to daily. It has by far given me the most returns out of anything I’ve done.
Unfortunately Acquire has tens of thousands of businesses and gets 100+ listings every week. Despite spending close to 10 hours a week on Acquire I’m never able to go through all the listings. And that’s just one marketplace.
90–95% of listings on marketplaces like Acquire are either stale, without updated stats, dead businesses, have a terrible asking price, or just aren’t good businesses.
I find many sellers quite simply a little delusional when it comes to the negatives of their business and how much it’s worth. At the end of the day, beauty (valuation) is in the eye of the beholder. Your business is only worth what you can convince others to pay — not a standard multiple you’ve fantasised about.
The Numbers Behind the Process
We’ve bought 6 businesses so far. For each deal closed we’ve gone through at least 100–200 businesses. Maybe even more. That’s almost 1,000 different micro startups reviewed.
This has given me a real intuition for acquiring micro startups — how to value them, and how to interact with sellers.
Here are my 5 tips for finding the needle (your ideal micro startup) in the haystack (thousands of businesses for sale). For serious buyers only.
Five Tips for Serious Buyers
1. Check marketplaces 3x a week
Acquire has over 500,000 registered buyers. The best deals are taken within weeks. If you check once a month you’re likely to miss them entirely. Most listings are stale and will give you a bad impression of what’s available — Acquire is the best marketplace by far, and Microns.io also has some solid micro startups.
2. Analyzing listings is like a muscle
You have to work it out very often to maintain your sense. There are different ways to analyze listings and find the right business. For PE firms and startups, there are debt constraints or multiples to work within. With micro startups, the potential return depends a lot on the buyer and their capabilities. The risk is low when buying for under $5,000 and the potential reward is quite high if you can make it a viable business.
3. Filters are your best friend
Marketplaces have filters around revenue, industry, startup age, number of customers, and more. Use them to navigate thousands of listings effectively. Use them as much as you can to get a real understanding of the different types of businesses available.
4. You don’t need the perfect deal to enter negotiations
Finding the right business is extremely important but it’s just the first step. You need to know how to value the business, conduct due diligence, negotiate a good deal, and then actually run it. You need to enter negotiations multiple times before learning the ropes and crafting the perfect deal.
5. Track things and go back to old deals
It’s important to track and measure your search — you get a lot of important data this way. There’s also a lot of alpha in going back to deals that didn’t work out but are still on the market. After a couple of months, many sellers are willing to give you a more favorable deal in order to close. Go back to old deals you found interesting to see if there’s a way to make them work.
Here’s a Look at Our Acquire CRM
Best of luck to those seriously looking at acquiring a business. It takes time to get a good system going, but once it’s in place it really becomes easy to find deals with high alpha.