That's easy! I buy a business!

Yeah, I know, the headline's a bit clickbaity. But come on, that's the name of the game these days, right? You gotta catch people's eye. It's like that in every field. You have to be different, you know? Give them that one thing that'll make them stick around for a sec.

The introduction aligns seamlessly with the topic at hand. Over the past several weeks, I have conducted interviews with more than 40 search funds. Discussions centered around their objectives, strategic plans, and approaches. Furthermore, eightM has onboarded a substantial number of searchers to facilitate deal sourcing and M&A activities on the buy side.

In response to this increased demand, we are compelled to optimize our internal processes, undertake strategic investments, and refine our business model. Moreover, the success of our enterprise is contingent upon the achievements of our clients; thus, a comprehensive evaluation of the factors influencing their success is warranted.

We've all gotten together as a team to lay out some pretty tough rules for our new clients. We think these rules will help all our searchers get on the same page and find success faster.

1. Industry Focus

One big question is what industry a target should be in. For me, it's a total dealbreaker if someone says, 'We're open to any industry.' Why? It shows they haven't really done their homework on any specific market. They just want to own a business. That makes it super hard to talk to a business owner who might be interested in selling. So, we try to get them to focus on a specific industry or at least think about it more seriously. It's a real bummer when the first question in a call is, 'Why our industry?' – and they can't give a good answer.

2. Personal Background

There's an old saying, 'A jack of all trades is a master of none.' It's a German proverb, and while I don't totally agree with it, there's some truth.

The company has to be a good fit for the searcher. As a service provider, we need people who've worked in corporate America. So, we have to turn down people who just graduated college and want to buy a company right away. I'd tell them to check out publicly traded companies instead (we do only off market deals).

It's also important that the searcher's background matches what they're looking for. If someone's been an engineer in oil and gas for 10 years, it's hard to see how they'd help a cybersecurity company grow. The story has to make sense. We love searchers who have experience in the industry they're targeting. That's what opens doors and gets deals done.

3. Competive Parameter

A thorough understanding of competitive dynamics is essential. Specifically, it is imperative to identify competitors targeting similar acquisition opportunities.

Search fund investors, while seeking robust financial performance, exhibit striking similarities to private equity firms. Although search fund proponents often emphasize distinct operational philosophies, empirical evidence suggests a convergence of strategies.

While there are nuanced differences between these two investment models, which will be discussed in greater detail subsequently, it is evident that search funds, particularly those targeting companies with an EBITDA of $2 million or more, occupy a competitive landscape largely defined by private equity norms.

Conversely, searchers who deviate from conventional deal parameters may encounter less competitive environments. Smaller, highly profitable enterprises often remain underrepresented in the acquisition market, presenting a more favorable opportunity set for search funds. These targets are less frequently solicited, facilitating the development of meaningful relationships with sellers.

This is just a taste of what we're looking for in new clients. Hopefully, it can help you narrow down your search. With so many people trying to buy businesses in the US, it's a really competitive market. Not everyone is going to find a company, so you need to be clear about what you want.

At present, we have 65 active searches in the US. Let's take a quick look at what's going well and what's not. Our TOP 5.

(+) Works

1. Microsoft Dynamics 365
2. Aviation MRO
3. ITAD
4. Sport Events
5. Manufacturing

(-) Low Responses

1. Pest Control
2. Property Management
3. HVAC
4. Landscaping
5. MSP

Thanks for following! If you are in Austin, TX (coffee is always a good idea). Give me a call or a message or a carrier pigeon.

Happy Weekend Y'ALL,

Andre Achtermeier

[email protected]