🔑 Buying a business is CHAOS
Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:
- Buying a small business is chaos. Here's how to navigate it
- Off-market childcare & early learning center
- Making millions by cleaning up crime scenes
🔑 There are 350,000+ businesses waiting for you
There are over 350,000 businesses in the United States with $5m to $100m in annual revenue.
No, there isn't "too much competition" for you to find one good business to buy.
I love this chart, which I stumbled on while reading Brent Beshore's blog.
Brent is is the Founder and CEO of Permanent Equity, a private equity firm focused on long-term investments in small to mid-sized family-owned businesses in North America.
He's one of our main inspirations at Enduring Ventures, and I've learned a lot from his writing.
For this newsletter, I want to share some of the main takeaways from his book The Messy Marketplace (order yourself a copy here if you haven't read it).
The book is written for perspective business sellers and guides them on how to sell their business, but it can teach us a lot about the inverse perspective: How to buy great businesses.
Here's the main lesson: The marketplace for buying and selling privately-held small-to-medium businesses is way messier than most people think. There is no market price or set multiple in a given industry. Every single deal in SMB land will have some hair on it. We aren't trading billion-dollar public companies here.
Here are some more of the lessons from Brent:
- Understand the Buyer Landscape: The market for selling businesses is fragmented, with diverse buyer types (strategic buyers, private equity, family offices, etc.), each with unique motivations, constraints, and processes.
- Imperfect Buyers Are the Norm: Expect buyers to have flaws: limited capital, specific agendas, or operational weaknesses. Success lies in identifying buyers whose goals align with your business. As a buyer, making it extremely clear that you are the right person to run their business can be more important than having the best offer.
- Valuation Is Subjective: Business value isn’t a fixed number; it depends on the buyer’s perspective, market conditions, and your company’s unique attributes. Prepare to compete against a wide range of offers, and don't be afraid to break from the "standard multiple" because it doesn't exist.
- Due Diligence Is Critical: Buyers will scrutinize financials, operations, and risks. Ensure your business is “clean” with accurate records and transparent operations to avoid deal-killing issues.
- Know Your Leverage: Sellers with strong cash flow, loyal customers, or unique market positions have more negotiating power. Highlight these strengths to attract better offers.
- Timing Matters: Selling at the right time (e.g., during growth or market upswings) can maximize value. Waiting too long or selling under distress reduces negotiating leverage. Put another way: Can you negotiate great terms to buy a business that's under stress now, but will likely recover?
- Prepare for Emotional Challenges: Selling a business is emotionally taxing. Be ready for uncertainty, tough negotiations, and the need to let go of your “baby.”
- Deal Structures Vary: Offers may include cash, earn-outs, or equity in the buyer’s company. Your deal might have a little bit of everything.
- Buyers Prioritize Risk Mitigation: Buyers focus on minimizing their risks (e.g., customer concentration, owner dependency). Address these concerns upfront to build trust.
- Intermediaries Add Value: Brokers, advisors, or M&A professionals can navigate complexities, find better buyers, and improve deal terms, but choose them carefully.
- Post-Sale Transition Is Key: Buyers often require the seller to stay on temporarily. Clear transition plans ensure smoother handoffs and protect deal value.
- Market Realities Are Messy: The process is rarely linear or predictable. Expect misaligned expectations, delays, and negotiations, and stay adaptable.
🔑 Off-Market Childcare & Early Learning Center
Not every deal makes it to the open market. This childcare and early learning center has been part of the Phoenix community since 2002, serving families for over two decades.
With ~$2.5M+ in revenue and ~$1.5M+ in earnings, it’s a steady cash-flow business in a sector where demand doesn’t go away. The center’s reputation is long-established, and for the right buyer, there’s upside in modernizing operations, refreshing marketing, and expanding enrollment.
Why this stood out:
- Established brand: Two decades of operations and a trusted name in the Phoenix community.
- Essential service: Childcare demand is steady and resilient through cycles.
- Prime location: The Phoenix MSA is one of the fastest-growing regions in the country.
- Upside potential: Modernize ops, refresh marketing, expand enrollment.
If you want more details about this deal, set up your buyer profile on Mainshares and get matched with off-market deals that fit your search.
This message is not investment advice. Do your own research before allocating capital. Thanks to our sponsor, Mainshares, for supporting thoughtful small business investing.
🔑 Cleaning up crime scenes and making millions
I chatted with Steve Keller, who bought two crime scene cleanup companies and sold them for $5.8 million in less than a year.
While I knew nothing about crime scene cleanup before this conversation, Steve gave me a masterclass on the margins, operational challenges, and how to work with insurance companies.
Check out this episode for one of the most unique podcasts I've ever recorded:
Have a great day,
Sieva
P.S. - Are you hiring? Get started with top global talent from Somewhere (I'm a customer and investor)
Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.
