Acquisition Entrepreneurship

I’m always skeptical of people selling educational programs or systems in a box. The recent Amazon drop shipping craze comes to mind. The issue I have is that people selling programs could and should just build a business around what they’re trying to sell you on. Acquisition Entrepreneurship is somewhat different, that’s the good news. However, the same skepticism comes to mind. The following video is a brief introduction from one of the better models in the industry, Acquira.

Buying a small business sounds like a good idea when you look at it on paper. Many can be bought for 2x current free cash flow. If the numbers are real, the business can keep its customers or doesn’t have any legal impediments, it’s a good deal. The problematic part of the deal is that you have to operate the business or find a manager to do it for you. For people that want to operate, you have to question if the same money paid for this acquisition would help you build a similar business? Some businesses are location dependent and the location is on the downtrend where the money you spend to buy it would be better served in other locations. Some businesses are owner dependent and the customers/clients are attached to the current owner’s work.

Another question with acquiring an existing business is the obvious future potential of the entity. There’s a reason the current owner is selling, normally not because everything is fantastic. The better price you get, the more weary you should be. If that’s not apparent, you should be buying a company. I think a company like Acquira are trying to find new owners to run the businesses because the return on investment is pretty good still, especially if they’re fanatics about the industry. Why do you think you have to apply? They put you through a process to qualify you and see if you’ve got the right mindset and since they’re putting up money too, it makes sense to do so.

Again, why they’re not just raising money like Tai Lopez to roll up certain industries like AutoNation did is where I take issue. Acquira isn’t the only company doing this and no one has been successful at scale. I don’t think this is the new Private Equity model or Ycombinator for small business. It isn’t a new model at all really. Jay Abraham and friends of Tony Robbins were doing this back 20 years ago. Today, there are more deals available and the internet has helped with the due diligence a bit; however, buyer beware.

TLDR;

• Business owners that are selling for cheap do so for a good reason
• Owner financing doesn’t make the deal less risky
• If you can use the same cash to build your own, do that