Edition #1

Howdy y'all,

So here it is. The first issue of the somewhat different newsletter. As promised, with a few anecdotes from the daily deal sourcing madness. Everything here happened exactly like this. I hope you enjoy it and gain some insights.

Andre Achtermeier

Value without financials, please

On rare occasions, we encounter a potential client situation where the CEO requires upfront enterprise value information before engaging in discussions. In such instances, where the value proposition for our client remains undefined, even in broad terms, it can be challenging to proceed. In one such scenario, we responded with a placeholder figure of "17" (without further context) to facilitate the initial conversation.

Surprisingly, the CEO agreed to a call. During the conversation, it became clear that the company's annual revenue of $2 million fell outside our client's target range. However, the CEO, in a gesture of goodwill, provided additional data and expressed interest in future collaboration once a suitable buyer is identified. Notably, the initial placeholder figure was not revisited during the call.

While this situation presented an unusual approach, it is not a recommended course of action in most professional sourcing interactions. ;-)

First Time Buyer - 4 Mistakes why your deal flow stucks

If you are a first time buyer and want to buy a business you need to get in contact with business owner. It′s just that simple. But it can be frustrating. No one wants to entertain a call with you. You were not able to send an offer, yet.

You do these 4 mistakes. 100%.

1. You don′t have a plausible buyer story. You want to buy a CNC shop but you don′t have a technical understanding. You want to buy a Software business but you don′t have any skills or knowledge in coding. Just real world examples.
2. You don′t want skin in the game. 100% sellers finance. 100% earn out. 100% banking finance. I know that there are many "internet gurus" outside who promote this system. Believe me. That is not a way to go. The seller wants skin in the game. Then... and only then... you can negotiate a sellers finance.
3. You don′t speak the language of the business owner. Your messaging is bad. Maybe your primary topic are the financials but the primary topic of the seller are the employees. You speak about the valuation. The seller wants to know about your growth strategy.
4. You search targets where all others are searching target. BizBuySell, Flippa and all the other public platforms. If your only source are these platforms - you will only find deals that are not the first choice. Good deals are not public. Good deals are hard work. Good deals are research and preparation.

We created an special service for first time buyers. Feel free to read more here.

USD 2M to USD 10M in 1 year

During a recent call with our client and a potential acquisition target, I directly inquired about the target's pricing expectations. While this approach may not always be suitable for initial meetings, it proved effective in this instance.

The target's company currently boasts a $2 million EBITDA, but they expressed a desire to postpone a potential sale until the end of next year, anticipating an increase in EBITDA to $10 million by that time. This represents a significant projected growth trajectory.

Naturally, we expressed surprise and inquired about the target's strategies for achieving this ambitious growth. Their response, however, was somewhat lighthearted: "I'm getting divorced this year, which will remove certain inhibitions." This led us to believe that the target may not have been entirely serious about their growth plans. ;-)

All the best for you and thanks for reading. The next edition will be in 2 weeks. With a lot more sourcing stories.

Have a good time.