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Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game
Entrepreneurs have a startups. Almost all startups either fail or never truly reach a sustainable size. Despite the popularity of entrepreneurship, we haven’t engineered a better way to start. …Until now.What if you could skip the startup phase and generate profitable revenue on day one?In Buy Then Build, acquisition entrepreneur Walker Deibel shows you how to begin with a sustainable, profitable company and grow from there. You’ll learn how ● Buy an existing company rather than starting from scratch ● Use ownership as a path to financial independence ● Spend a fraction of the time raising capital ● Find great brokers, generate your own “deal flow,” and see new listings early ● Uncover the best opportunities and biggest risks of any company ● Navigate the acquisition process ● Become a successful acquisition entrepreneur ● And more Buy Then Build is your guide to outsmart the startup game, live the entrepreneurial lifestyle, and reap the financial rewards of ownership now.
312 pages, Kindle Edition
Published October 30, 2018
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June 25, 2020
This book grossly oversells the opportunity of entrepreneurship through acquisition and irresponsibly excludes numbers that go against the book's pitch. As a book that's supposed to give you an in-depth understanding of this investment type, the author is actively misleading the reader. A few quick notes to make my point:
* SDE should not be included in its entirety in your return because a part of it (or all of it) is the salary for the 8-12 hour days you are putting in to run the business. It's salary that pays for living costs that you'd be making as an employee working somewhere else. That should not be included in ROI.
* Business taxes are for some reason completely excluded from ROI calculations and because loan repayment is not tax deductible, the tax burden can be meaningful
* The author fails to mention that small businesses are notoriously more volatile and you need to have significant cash cushion
* SBA loans as mentioned in the book require you to personally guarantee all loans which hold your personal assets and credit score as collateral, greatly increasing the overall risk/reward
* SDE should not be included in its entirety in your return because a part of it (or all of it) is the salary for the 8-12 hour days you are putting in to run the business. It's salary that pays for living costs that you'd be making as an employee working somewhere else. That should not be included in ROI.
* Business taxes are for some reason completely excluded from ROI calculations and because loan repayment is not tax deductible, the tax burden can be meaningful
* The author fails to mention that small businesses are notoriously more volatile and you need to have significant cash cushion
* SBA loans as mentioned in the book require you to personally guarantee all loans which hold your personal assets and credit score as collateral, greatly increasing the overall risk/reward
March 7, 2019
Buying and improving small companies is indeed a fantastic opportunity.
It seems to me that this book could had been shorter. Typos distract readers and make us think that you haven’t thought much about what you are communicating. There are also mathematical misconceptions, you can’t just calculate investment returns without considering when you recieve the money (it’s very different to recieve say $60 after 5 years than $12 a year during 5 years, the latter case being way more profitable). A way more appropriate metric is internal rate of return.
Also, buying businesses by borrowing 90% of the money and using your own assets as collateral is absurdly reckless. That’s playing Russian roulette. This book is supposed to be for beginners. You can’t sensibly suggest that to a beginner (nor to anyone who isn’t your enemy).
It’s too US-centric. Nowadays investors from almost anywhere can buy a business from almost anywhere. And this trend will keep growing, as companies are less location dependant.
It seems to me that this book could had been shorter. Typos distract readers and make us think that you haven’t thought much about what you are communicating. There are also mathematical misconceptions, you can’t just calculate investment returns without considering when you recieve the money (it’s very different to recieve say $60 after 5 years than $12 a year during 5 years, the latter case being way more profitable). A way more appropriate metric is internal rate of return.
Also, buying businesses by borrowing 90% of the money and using your own assets as collateral is absurdly reckless. That’s playing Russian roulette. This book is supposed to be for beginners. You can’t sensibly suggest that to a beginner (nor to anyone who isn’t your enemy).
It’s too US-centric. Nowadays investors from almost anywhere can buy a business from almost anywhere. And this trend will keep growing, as companies are less location dependant.
Read
January 26, 2019One of the most interesting investment opportunities I’ve seen in the last few years is acquiring and growing a small business.
There are two macro trends driving this opportunity. One is a huge wave of baby boomers that are retiring and looking to sell their small businesses. The other is the proliferation of niche businesses on the internet which expands the number of small businesses that can operate profitably.
As Deibel points out in Buy then Build, these opportunities are largely overlooked because of the widespread belief that “real entrepreneurs” must start their own business.
20 years from now, I think “acquisition entrepreneurship” will be as common as going to a MBA program is today. In the meantime, it’s a huge opportunity to hop on the train early and Buy Then Build lays out who is a good fit for acquisition entrepreneurship and how the process works, from finding to evaluating to buying a company.
There are two macro trends driving this opportunity. One is a huge wave of baby boomers that are retiring and looking to sell their small businesses. The other is the proliferation of niche businesses on the internet which expands the number of small businesses that can operate profitably.
As Deibel points out in Buy then Build, these opportunities are largely overlooked because of the widespread belief that “real entrepreneurs” must start their own business.
20 years from now, I think “acquisition entrepreneurship” will be as common as going to a MBA program is today. In the meantime, it’s a huge opportunity to hop on the train early and Buy Then Build lays out who is a good fit for acquisition entrepreneurship and how the process works, from finding to evaluating to buying a company.
January 15, 2019
Yes, it is a good book. Good all-round information from why buying to actually concluding a deal. I must admit I was more after information for buying companies with LBO type financial engineering. After reading more about acquisition entrepreneurship lately and not just in this book, I have come to realise that you can read a lot, but you can't learn the soft skills or on the ground skills that are required unless you actually do a deal (handheld or not). Where the author has had a tremendous advantage is that he bought his first company off his parents.
July 8, 2024
A Great Optiom
Better than start up, the buy then build approach is a great option for the entrepreneur minded who want to reduce risk and get a head start with building a business. You’ll get a good overview of the process and the key steps and pitfalls. A must read to get started before you decide to start from scratch.
Better than start up, the buy then build approach is a great option for the entrepreneur minded who want to reduce risk and get a head start with building a business. You’ll get a good overview of the process and the key steps and pitfalls. A must read to get started before you decide to start from scratch.
June 24, 2026
Peter Thiel is fond of asking people, “What important truth do very few people agree with you on?”
by buying a company, typically one greater than $1 million in revenue, you can remove so much of the risk inherent to entrepreneurship.
many successful small businesses have been operating for decades. This means their model for success was developed a long time ago, and many of these businesses could benefit from the fresh approach and skillset of the next generation of entrepreneurs. There is a lot of opportunity inside small companies that operate on legacy systems, never upgraded to lean business models, or never developed sales teams or effective online marketing.
I acquired the company in early 2015 with a low six-figure investment and a bank loan.
Over the past ten years since then, I’ve acquired seven different companies and made minority investments in more. These have included book printing, distribution, promotional product companies, eCommerce, education, and metal fabrication and finishing.
There are roughly 500,0003 small businesses acquired each year.
brokers typically want to see a few hundred thousand in available cash
Banks offer loans to buyers for up to 90 percent of the purchase price, using the assets of the business as collateral.
search funds. These funds are dedicated to helping acquisition entrepreneurs buy businesses. These funds can also assist in helping you acquire significantly larger companies than you could do on your own, effectively allowing you to stretch well into the middle market (which I’ll define here, as those companies generating between $5 and $100 million in revenue.
$65,000 invested plus 90 percent SBA loan equals a $650,000 purchase price. A company of that size is commonly acquired around a multiple of three times adjusted earnings. 7 Adjusted earnings therefore are $216,000 ($650,000 divided by three).
Assuming a 15 percent adjusted earnings-to-revenue ratio, this company is generating over $1.4 million in revenue.
To be classified as a gazelle, a company must have a starting revenue of at least $1 million, then grow at a rate of 20 percent every year for four years, resulting in the company doubling in size during that time.
Almost 77 million people, about 20 percent of the US population, are going to retire between 2013 and 2029, and it is estimated that $10 trillion in existing business value will need to change hands. substantial increase in supply of available businesses for sale.
BuyThenBuild.com
three fundamentals in mind: return on investment, margin of safety, and upside potential.
Let’s say you sell that asset after seven years. Luckily, it’s worth more than when you bought it, so you sell it for $120. During the seven years you owned it, you made $6 every year, or $42. Adding the $20 increase in value of the asset you realized when you sold it, you made a total of $62 on a $100 investment over seven years. 19 This equates to an 8.9 percent annual ROI during the life of the investment ($62/seven years).
In the illustration above, the increase in value of the asset made up about a third of the total return.
A business with under $5 million in revenue and a track record of positive ongoing cash flow for fifteen years is somewhere in the middle. It’s significantly safer than a startup, but not nearly as secure as a US-backed security.
companies under $1 million in revenue might sell for two to three times their cash flow, while large, publicly traded companies comfortably trade at a price-to-earnings ratio in the twenties or well beyond.
But what about a small company with under $5 million in revenue? The large volume of transactions that do not involve a private equity acquisition will settle in at an approximate three to four times.
To apply this knowledge, let’s reexamine the example from Chapter 1, where the company was generating $216,000 in annual cash flow. the cash flow will be calculated by looking at all cash the company is generating for the benefit of the owner. We’ll get into the details of this later. For now, just know that it’s referred to as seller’s discretionary earnings (SDE, or sometimes just “DE” for discretionary earnings).
Let’s assume that this company can be acquired for 3.2 times the SDE, or $691,200. Let’s also assume you’ll have an additional $200,000 in inventory and working capital, as well as $50,000 in closing costs and legal fees. This bring the total cash need to $941,200.
You work with an SBA lender to acquire the business with a 10 percent down payment, or $94,120 out of pocket.
When the total benefit is used to calculate the annual ROI to the buyer, it’s a staggering 230 percent. The investor invests $94,000 and gets $216,000 as an annual return.
In this example, about half your cash flow is now going to equity buildup in the form of monthly debt payments for the acquisition. It’s a lot, but not bad considering a 90 percent leveraged asset.
Despite the debt payments, you’re still getting just over $100,000 in annual cash flow to either take as salary or reinvest into the company, which translates on its own to an annual ROI of over 100 percent.
Despite the debt payments, you’re still getting just over $100,000 in annual cash flow to either take as salary or reinvest into the company, which translates on its own to an annual ROI of over 100 percent, in the calculated 230 percent annual ROI. We’ll extrapolate this when we consider upside potential.
the average startup launches with $65,000 in invested capital and has an approximate 90 percent chance of failure.
A venture-backed firm accepts an average of $41 million per startup and has an approximate 75 percent change of failure.
Now let’s compare that to the acquisition entrepreneurship model.
According to the Small Business Administration, 26 default rates of small business loans are currently right about 2 percent. Similarly, according to the Thompson Reuters/PayNet Small Business Delinquency Index (SBDI), 27 the amount of small business loans that go delinquent on the national level has been running under 1.5 percent since 2012.
This means the $1 million at risk when acquiring a business has about a 2 percent chance of failure. This is a drastically different profile than building from scratch. If you equate not failing with success, then buying a company has an approximate 98 percent success rate.
The debt is typically collateralized by the hard assets of the company.
If a 10 percent growth rate is achievable in your business, then it will be twice the size it is today in just seven years.
building equity through your debt payments
you might even choose to accelerate the growth of your company through additional acquisitions and fund them entirely through the cash flow of your business.
Google, for example, did not even invent Adsense—their enormous pay per click management platform—they acquired Adscape for $23 million and built it out from there.
business that serves a need that is very unlikely to go away. snow removal and landscaping company. Plumbing, laundry, electricity, boat docks, FBOs, and preschools
In private equity, a platform company refers to the first company a firm acquires in a specific industry.
You first identify your strengths, then match it to the growth opportunity the potential acquisition offers. When the match is right, you stop looking and move forward.
After buying half a dozen companies and looking at ten times that many, no broker has ever asked me what type of growth opportunity I’m looking for. Instead, they want to know what industries I’ve worked in and try to apply that to targets. You can see how this structure doesn’t move the buyer forward with confidence when they start looking at potential companies.
the Seller Discretionary Earnings (SDE), is a measure of how much total cash flow the seller of the firm has been enjoying. It is calculated by taking the pre-tax earnings of a company, then adding back any interest and non-cash expenses like amortization and depreciation (which will give you Earnings Before Interest, Taxes, Depreciation, and Amortization). Finally, adding in any seller benefit such as salary, personal insurance and vehicles, and any one-time expenses the company had during that time.
As listings move from Main Street to middle market, a definition largely defined by size, you’ll likely see Adjusted EBITDA as the metric used instead of SDE. They typically refer to the same thing. The difference is often that Adjusted EBITDA is the term largely used for passive ownership, while SDE refers to active ownership.
Let’s say X is the amount of liquid capital you have available to put toward buying a company. Take X and divide by 10 percent to get the purchase price (PP) of the business at a 90 percent leveraged position.
The purchase price, as we have covered, is derived by paying a multiple (M) of Seller Discretionary Earnings (SDE).
Dividing both sides by M reverses the equation to determine what the SDE would be, given a specific purchase price and multiple.
Other considerations will include Accounts Receivable minus Accounts Payable and Inventory, as well as any additional working capital you might choose to add. Closing costs at the bank are also allowed to be rolled into the loan, so you’ll have to pay 10 percent of those fees up front. In addition, and especially at high debt levels, you’ll want to keep cash aside should the company get tight on cash.
industry is not the driver for many people’s success. Instead, defining the industry by general type, such as manufacturing, distribution, product, online, or service allows for defining the target company with the right metric
CPA John Bly, author of Cracking the Code: An Entrepreneurs’ Guide to Growing Your Business Through Mergers and Acquisitions for Pennies on the Dollar, has done just this with his accounting firm
Business Brokerage Press’ Business Reference Guide. 42 This is a wonderful reference for determining trends, valuations, margins, expense breakdowns, other benchmark data, and expert comments.
I am looking for a [choose product, distribution, or service] company with [enter the type of growth opportunity], generating [define size by SDE range], with [enter any limiters].
“I am looking for a distribution company with strong sales and marketing processes but needing operational excellence, generating $300,000 to $400,000 in Seller Discretionary Earnings, in or around the Chicago area.”
“I am looking for a manufacturing company with no current eCommerce presence, generating $250,000 to $300,000 in SDE.”
“I’m looking for a commercial IT service business with solid operations but lacking a strong B2B sales effort, generating between $750,000 and $1,000,000 in SDE in the regional southwest.”
“I am looking for any service company tied to real estate with a direct sales effort needed as the driver for growth, generating between $400,000 and $500,000, located in the greater Portland area.”
there are three things most people do that you need to ignore: skip the internet, don’t commit to one broker, and don’t depend only on listings.
start a spreadsheet as you look at listings and record industry, location, revenue, asking price, and any other critical or comparative information
I do want you to go online and look at listings because you’ll get familiar with what’s out there, the different ways to search and review, and you can get additional information without wasting too much of an advisor’s time.
There are three possible types of businesses on these sites: junk, nongrowth, or good. By “non-growth,” I’m referring to laundromats, car washes, and restaurants.
they’ll typically put it on an online marketplace only after they’ve reached out to vetted buyers and their professional network. Which brings us to the lesson: you need to get upstream.
this is the business brokers, intermediaries, I-bankers, and M&A Advisors44 who get the listings in the first place.
I was able to move fast, secure a Letter of Intent within a couple business days
Phase 1 of your search is to meet with every intermediary in your area, explain what you’re looking for, review their current listings, and get on their email list for new listings. This will result in you getting vetted and upstream to the deal flow in your area.
First, and at the very basic level, how do you present yourself? Are you someone they could introduce to potential sellers with confidence? Second, do you have the money? Are you capable of pulling the trigger on an acquisition if they find one? Third, what type of business are you looking for?
The first point is obvious. Be on time. Dress intelligently. Let them know that you’ve been reading books on the process to “get smart” about buying a business and analyzing what you are looking for. Follow up with a “thank you” email after the meeting, highlighting next steps. Just do the basic things that professionals do.
If you have a personal balance sheet available and your resume ready to email after the meeting, you will thrill them with your preparedness and professionalism. Explain that you understand that most searches fail. Most buyers they spend their time with are a waste. Let them know that you are committed to buying a company within six months.
Second, do you have the money? If brokers could, they would ask this before they ask your name. To get a deal closed will take a lot of time and effort on their part. It’s committed work for six to eighteen months, depending on how it goes. Making sure they have a buyer who isn’t going to leave them at the alter is critical.
If there is a head broker of the firm, make sure your first meeting is with them. That’s who you want to work with because they know the most people, or they will be able to direct you to the right broker in their firm who is best for you.
Does the firm validate any information? Do they review and vet listings? How do they go about getting listings? Do they specialize in certain industries? Who else do they know that can help you on your search? Does the broker have business management experience? Were they an owner at one point themselves? How did they come to becoming an intermediary? Are they a licensed broker? How are they compensated? These are all questions you will want to know.
be aware that everything you look at from the beginning should be assumed to be false, since the broker takes no responsibility to qualify their listings.
Ask if you can set up another meeting in a month to touch base, and get on their mailing list.
Many intermediaries will want to help you without any commitment at this point. Some may try to engage you in a buyer’s agent contract where you pay them a monthly fee for an outbound search. You do not have to do this. I’ve met with intermediaries who don’t have active listings and they are typically the ones wanting to engage in a paid search.
The owners are not as far along in the selling process as those who have listed with a broker, but setting up repeat meetings with the owner of a company you’d like to acquire will get you through the process.
My strategy is typically to reach out directly and start a conversation. If they want to explore, I simply tell them that there is a broker I’m working with who can work confidentially with them on putting together a valuation. If the potential seller likes the valuation, the broker can present it to me and we can go from there. This is a great strategy for getting the ball rolling.
you’ll need a bank to give you a loan, and I recommend asking for the maximum you can get, for two reasons: First, you can always take less, and every banker will understand your interest in evaluating a maximum ROI investment. Second, if you don’t prep the bank for the maximum you can get at the beginning, then you risk not being able to close on the business a few months down the line. Get access to as much capital as you can and make the decision later.
the buyer needs a minimum of $150,000 to inject 10 percent equity investment at closing, with a loan of $1,350,000 to close the deal. WWED? Or, What Would an Entrepreneur Do? They would find an investor to sell 10 percent of the company to for $150,000. . Plenty of angel investors would take a deal like this. Your job as the CEO of the company you don’t have yet is to go find them and get your pitch deck ready.
Now that you’re actively looking for a business and have started meeting with brokers, you need to start meeting with banks as soon as possible.
To prepare for meeting with banks, put together your personal balance sheet and pull together your tax returns for the last three years.
Banks work with a lot of small business owners and entrepreneurs and might even know potential sellers. But don’t assume they’ll share proactively—make sure you ask them specifically.
bankers have exposure to many M&A Advisors. Ask them who they have had exposure to, who they like, and whether they’ll help you with an email introduction.
The driver of the bank business model is in making loans—this is how they make money. Every bank wants to be the first bank to look at a loan opportunity so they can decide whether they want it or not.
Ask them if they do deals like the one you are talking about. Ask them how they feel about real estate loans, small business loans, working capital loans, and whether personal guarantees are required. Ask for examples and referrals. Every referral can also put you in touch with whoever brokered their deal. Are you getting the idea behind this networking thing?
Whether they are loaning or not is mostly decided by an internal loan-to-deposit (LTD) ratio metric that only the bank knows. Most sustainable business lending banks are going to have somewhere between 60 to 70 percent loan to deposit ratio, while banks in growth mode want to be at a minimum of 90 percent. Bank regulators don’t typically get involved unless the banks start getting over 100 percent loan-todeposit. Finding banks actively looking to give loans is your objective. A hungry bank with a good opportunity (i.e. yours) in hand will be ready to fund quickly.
Loan-to-deposit ratios, however, change with every loan issued. As a result, a bank that’s a great fit today might not be in four months. This is why you need to build a network of bankers, because you won’t know which is ready when it’s time to execute. Of course, don’t ask this question outright; it’s none of your business.
The good news is that if it is a bank that is committed to supplying SBA loans, the SBA-backed portion does not affect the bank’s ratio, meaning you shouldn’t experience a quick change of heart.
Specifically, ask them whether they are an SBA preferred lender. If they are, you’ll save time in your ability to close, saving over six weeks in some instances. This is because preferred lenders can underwrite the loan in-house rather than working with an external SBA processor.
WHAT BANKS LOOK FOR
Ultimately, banks will be looking at the target company’s ability to pay back the loan. At the end of the day, that’s all they truly require. They look for a minimum debt-to-earnings ratio of 1.25, but often banks will look for more— this is just the minimum.
Search funds are attributed to being started by H. Irving Grousebeck, 56 a Stanford University professor and cofounder of the Stanford Center for Entrepreneurial Studies in 1984.
The bank will require you to carry key-man insurance term of the unsecured portion of your loan, for the amount and so you’ll want to knock that out early. Engage an insurance company that your bank likes and get the process underway. Don’t buy the insurance yourself since this is a business expense that you can put into the company and get the tax benefit of.
lawyers are the number one leading source of deals that don’t close.
by buying a company, typically one greater than $1 million in revenue, you can remove so much of the risk inherent to entrepreneurship.
many successful small businesses have been operating for decades. This means their model for success was developed a long time ago, and many of these businesses could benefit from the fresh approach and skillset of the next generation of entrepreneurs. There is a lot of opportunity inside small companies that operate on legacy systems, never upgraded to lean business models, or never developed sales teams or effective online marketing.
I acquired the company in early 2015 with a low six-figure investment and a bank loan.
Over the past ten years since then, I’ve acquired seven different companies and made minority investments in more. These have included book printing, distribution, promotional product companies, eCommerce, education, and metal fabrication and finishing.
There are roughly 500,0003 small businesses acquired each year.
brokers typically want to see a few hundred thousand in available cash
Banks offer loans to buyers for up to 90 percent of the purchase price, using the assets of the business as collateral.
search funds. These funds are dedicated to helping acquisition entrepreneurs buy businesses. These funds can also assist in helping you acquire significantly larger companies than you could do on your own, effectively allowing you to stretch well into the middle market (which I’ll define here, as those companies generating between $5 and $100 million in revenue.
$65,000 invested plus 90 percent SBA loan equals a $650,000 purchase price. A company of that size is commonly acquired around a multiple of three times adjusted earnings. 7 Adjusted earnings therefore are $216,000 ($650,000 divided by three).
Assuming a 15 percent adjusted earnings-to-revenue ratio, this company is generating over $1.4 million in revenue.
To be classified as a gazelle, a company must have a starting revenue of at least $1 million, then grow at a rate of 20 percent every year for four years, resulting in the company doubling in size during that time.
Almost 77 million people, about 20 percent of the US population, are going to retire between 2013 and 2029, and it is estimated that $10 trillion in existing business value will need to change hands. substantial increase in supply of available businesses for sale.
BuyThenBuild.com
three fundamentals in mind: return on investment, margin of safety, and upside potential.
Let’s say you sell that asset after seven years. Luckily, it’s worth more than when you bought it, so you sell it for $120. During the seven years you owned it, you made $6 every year, or $42. Adding the $20 increase in value of the asset you realized when you sold it, you made a total of $62 on a $100 investment over seven years. 19 This equates to an 8.9 percent annual ROI during the life of the investment ($62/seven years).
In the illustration above, the increase in value of the asset made up about a third of the total return.
A business with under $5 million in revenue and a track record of positive ongoing cash flow for fifteen years is somewhere in the middle. It’s significantly safer than a startup, but not nearly as secure as a US-backed security.
companies under $1 million in revenue might sell for two to three times their cash flow, while large, publicly traded companies comfortably trade at a price-to-earnings ratio in the twenties or well beyond.
But what about a small company with under $5 million in revenue? The large volume of transactions that do not involve a private equity acquisition will settle in at an approximate three to four times.
To apply this knowledge, let’s reexamine the example from Chapter 1, where the company was generating $216,000 in annual cash flow. the cash flow will be calculated by looking at all cash the company is generating for the benefit of the owner. We’ll get into the details of this later. For now, just know that it’s referred to as seller’s discretionary earnings (SDE, or sometimes just “DE” for discretionary earnings).
Let’s assume that this company can be acquired for 3.2 times the SDE, or $691,200. Let’s also assume you’ll have an additional $200,000 in inventory and working capital, as well as $50,000 in closing costs and legal fees. This bring the total cash need to $941,200.
You work with an SBA lender to acquire the business with a 10 percent down payment, or $94,120 out of pocket.
When the total benefit is used to calculate the annual ROI to the buyer, it’s a staggering 230 percent. The investor invests $94,000 and gets $216,000 as an annual return.
In this example, about half your cash flow is now going to equity buildup in the form of monthly debt payments for the acquisition. It’s a lot, but not bad considering a 90 percent leveraged asset.
Despite the debt payments, you’re still getting just over $100,000 in annual cash flow to either take as salary or reinvest into the company, which translates on its own to an annual ROI of over 100 percent.
Despite the debt payments, you’re still getting just over $100,000 in annual cash flow to either take as salary or reinvest into the company, which translates on its own to an annual ROI of over 100 percent, in the calculated 230 percent annual ROI. We’ll extrapolate this when we consider upside potential.
the average startup launches with $65,000 in invested capital and has an approximate 90 percent chance of failure.
A venture-backed firm accepts an average of $41 million per startup and has an approximate 75 percent change of failure.
Now let’s compare that to the acquisition entrepreneurship model.
According to the Small Business Administration, 26 default rates of small business loans are currently right about 2 percent. Similarly, according to the Thompson Reuters/PayNet Small Business Delinquency Index (SBDI), 27 the amount of small business loans that go delinquent on the national level has been running under 1.5 percent since 2012.
This means the $1 million at risk when acquiring a business has about a 2 percent chance of failure. This is a drastically different profile than building from scratch. If you equate not failing with success, then buying a company has an approximate 98 percent success rate.
The debt is typically collateralized by the hard assets of the company.
If a 10 percent growth rate is achievable in your business, then it will be twice the size it is today in just seven years.
building equity through your debt payments
you might even choose to accelerate the growth of your company through additional acquisitions and fund them entirely through the cash flow of your business.
Google, for example, did not even invent Adsense—their enormous pay per click management platform—they acquired Adscape for $23 million and built it out from there.
business that serves a need that is very unlikely to go away. snow removal and landscaping company. Plumbing, laundry, electricity, boat docks, FBOs, and preschools
In private equity, a platform company refers to the first company a firm acquires in a specific industry.
You first identify your strengths, then match it to the growth opportunity the potential acquisition offers. When the match is right, you stop looking and move forward.
After buying half a dozen companies and looking at ten times that many, no broker has ever asked me what type of growth opportunity I’m looking for. Instead, they want to know what industries I’ve worked in and try to apply that to targets. You can see how this structure doesn’t move the buyer forward with confidence when they start looking at potential companies.
the Seller Discretionary Earnings (SDE), is a measure of how much total cash flow the seller of the firm has been enjoying. It is calculated by taking the pre-tax earnings of a company, then adding back any interest and non-cash expenses like amortization and depreciation (which will give you Earnings Before Interest, Taxes, Depreciation, and Amortization). Finally, adding in any seller benefit such as salary, personal insurance and vehicles, and any one-time expenses the company had during that time.
As listings move from Main Street to middle market, a definition largely defined by size, you’ll likely see Adjusted EBITDA as the metric used instead of SDE. They typically refer to the same thing. The difference is often that Adjusted EBITDA is the term largely used for passive ownership, while SDE refers to active ownership.
Let’s say X is the amount of liquid capital you have available to put toward buying a company. Take X and divide by 10 percent to get the purchase price (PP) of the business at a 90 percent leveraged position.
The purchase price, as we have covered, is derived by paying a multiple (M) of Seller Discretionary Earnings (SDE).
Dividing both sides by M reverses the equation to determine what the SDE would be, given a specific purchase price and multiple.
Other considerations will include Accounts Receivable minus Accounts Payable and Inventory, as well as any additional working capital you might choose to add. Closing costs at the bank are also allowed to be rolled into the loan, so you’ll have to pay 10 percent of those fees up front. In addition, and especially at high debt levels, you’ll want to keep cash aside should the company get tight on cash.
industry is not the driver for many people’s success. Instead, defining the industry by general type, such as manufacturing, distribution, product, online, or service allows for defining the target company with the right metric
CPA John Bly, author of Cracking the Code: An Entrepreneurs’ Guide to Growing Your Business Through Mergers and Acquisitions for Pennies on the Dollar, has done just this with his accounting firm
Business Brokerage Press’ Business Reference Guide. 42 This is a wonderful reference for determining trends, valuations, margins, expense breakdowns, other benchmark data, and expert comments.
I am looking for a [choose product, distribution, or service] company with [enter the type of growth opportunity], generating [define size by SDE range], with [enter any limiters].
“I am looking for a distribution company with strong sales and marketing processes but needing operational excellence, generating $300,000 to $400,000 in Seller Discretionary Earnings, in or around the Chicago area.”
“I am looking for a manufacturing company with no current eCommerce presence, generating $250,000 to $300,000 in SDE.”
“I’m looking for a commercial IT service business with solid operations but lacking a strong B2B sales effort, generating between $750,000 and $1,000,000 in SDE in the regional southwest.”
“I am looking for any service company tied to real estate with a direct sales effort needed as the driver for growth, generating between $400,000 and $500,000, located in the greater Portland area.”
there are three things most people do that you need to ignore: skip the internet, don’t commit to one broker, and don’t depend only on listings.
start a spreadsheet as you look at listings and record industry, location, revenue, asking price, and any other critical or comparative information
I do want you to go online and look at listings because you’ll get familiar with what’s out there, the different ways to search and review, and you can get additional information without wasting too much of an advisor’s time.
There are three possible types of businesses on these sites: junk, nongrowth, or good. By “non-growth,” I’m referring to laundromats, car washes, and restaurants.
they’ll typically put it on an online marketplace only after they’ve reached out to vetted buyers and their professional network. Which brings us to the lesson: you need to get upstream.
this is the business brokers, intermediaries, I-bankers, and M&A Advisors44 who get the listings in the first place.
I was able to move fast, secure a Letter of Intent within a couple business days
Phase 1 of your search is to meet with every intermediary in your area, explain what you’re looking for, review their current listings, and get on their email list for new listings. This will result in you getting vetted and upstream to the deal flow in your area.
First, and at the very basic level, how do you present yourself? Are you someone they could introduce to potential sellers with confidence? Second, do you have the money? Are you capable of pulling the trigger on an acquisition if they find one? Third, what type of business are you looking for?
The first point is obvious. Be on time. Dress intelligently. Let them know that you’ve been reading books on the process to “get smart” about buying a business and analyzing what you are looking for. Follow up with a “thank you” email after the meeting, highlighting next steps. Just do the basic things that professionals do.
If you have a personal balance sheet available and your resume ready to email after the meeting, you will thrill them with your preparedness and professionalism. Explain that you understand that most searches fail. Most buyers they spend their time with are a waste. Let them know that you are committed to buying a company within six months.
Second, do you have the money? If brokers could, they would ask this before they ask your name. To get a deal closed will take a lot of time and effort on their part. It’s committed work for six to eighteen months, depending on how it goes. Making sure they have a buyer who isn’t going to leave them at the alter is critical.
If there is a head broker of the firm, make sure your first meeting is with them. That’s who you want to work with because they know the most people, or they will be able to direct you to the right broker in their firm who is best for you.
Does the firm validate any information? Do they review and vet listings? How do they go about getting listings? Do they specialize in certain industries? Who else do they know that can help you on your search? Does the broker have business management experience? Were they an owner at one point themselves? How did they come to becoming an intermediary? Are they a licensed broker? How are they compensated? These are all questions you will want to know.
be aware that everything you look at from the beginning should be assumed to be false, since the broker takes no responsibility to qualify their listings.
Ask if you can set up another meeting in a month to touch base, and get on their mailing list.
Many intermediaries will want to help you without any commitment at this point. Some may try to engage you in a buyer’s agent contract where you pay them a monthly fee for an outbound search. You do not have to do this. I’ve met with intermediaries who don’t have active listings and they are typically the ones wanting to engage in a paid search.
The owners are not as far along in the selling process as those who have listed with a broker, but setting up repeat meetings with the owner of a company you’d like to acquire will get you through the process.
My strategy is typically to reach out directly and start a conversation. If they want to explore, I simply tell them that there is a broker I’m working with who can work confidentially with them on putting together a valuation. If the potential seller likes the valuation, the broker can present it to me and we can go from there. This is a great strategy for getting the ball rolling.
you’ll need a bank to give you a loan, and I recommend asking for the maximum you can get, for two reasons: First, you can always take less, and every banker will understand your interest in evaluating a maximum ROI investment. Second, if you don’t prep the bank for the maximum you can get at the beginning, then you risk not being able to close on the business a few months down the line. Get access to as much capital as you can and make the decision later.
the buyer needs a minimum of $150,000 to inject 10 percent equity investment at closing, with a loan of $1,350,000 to close the deal. WWED? Or, What Would an Entrepreneur Do? They would find an investor to sell 10 percent of the company to for $150,000. . Plenty of angel investors would take a deal like this. Your job as the CEO of the company you don’t have yet is to go find them and get your pitch deck ready.
Now that you’re actively looking for a business and have started meeting with brokers, you need to start meeting with banks as soon as possible.
To prepare for meeting with banks, put together your personal balance sheet and pull together your tax returns for the last three years.
Banks work with a lot of small business owners and entrepreneurs and might even know potential sellers. But don’t assume they’ll share proactively—make sure you ask them specifically.
bankers have exposure to many M&A Advisors. Ask them who they have had exposure to, who they like, and whether they’ll help you with an email introduction.
The driver of the bank business model is in making loans—this is how they make money. Every bank wants to be the first bank to look at a loan opportunity so they can decide whether they want it or not.
Ask them if they do deals like the one you are talking about. Ask them how they feel about real estate loans, small business loans, working capital loans, and whether personal guarantees are required. Ask for examples and referrals. Every referral can also put you in touch with whoever brokered their deal. Are you getting the idea behind this networking thing?
Whether they are loaning or not is mostly decided by an internal loan-to-deposit (LTD) ratio metric that only the bank knows. Most sustainable business lending banks are going to have somewhere between 60 to 70 percent loan to deposit ratio, while banks in growth mode want to be at a minimum of 90 percent. Bank regulators don’t typically get involved unless the banks start getting over 100 percent loan-todeposit. Finding banks actively looking to give loans is your objective. A hungry bank with a good opportunity (i.e. yours) in hand will be ready to fund quickly.
Loan-to-deposit ratios, however, change with every loan issued. As a result, a bank that’s a great fit today might not be in four months. This is why you need to build a network of bankers, because you won’t know which is ready when it’s time to execute. Of course, don’t ask this question outright; it’s none of your business.
The good news is that if it is a bank that is committed to supplying SBA loans, the SBA-backed portion does not affect the bank’s ratio, meaning you shouldn’t experience a quick change of heart.
Specifically, ask them whether they are an SBA preferred lender. If they are, you’ll save time in your ability to close, saving over six weeks in some instances. This is because preferred lenders can underwrite the loan in-house rather than working with an external SBA processor.
WHAT BANKS LOOK FOR
Ultimately, banks will be looking at the target company’s ability to pay back the loan. At the end of the day, that’s all they truly require. They look for a minimum debt-to-earnings ratio of 1.25, but often banks will look for more— this is just the minimum.
Search funds are attributed to being started by H. Irving Grousebeck, 56 a Stanford University professor and cofounder of the Stanford Center for Entrepreneurial Studies in 1984.
The bank will require you to carry key-man insurance term of the unsecured portion of your loan, for the amount and so you’ll want to knock that out early. Engage an insurance company that your bank likes and get the process underway. Don’t buy the insurance yourself since this is a business expense that you can put into the company and get the tax benefit of.
lawyers are the number one leading source of deals that don’t close.
July 14, 2022
Incredibly helpful. Lots of specific advice, little fluff. The frameworks and formulas were especially helpful. One of the 2 best books I’ve read regarding acquisition entrepreneurship. Check out the authors website for more helpful blog posts and spreadsheets. Considering paying for his advisory service (it’s between them and Acquira, but the latter focuses more on home service businesses and I’m looking more at health, analytics, and others)
July 12, 2021
Book in a sentence: shows how to do entrepreneurship through acquisitions, in which instead of you starting a startup, you buy existing and profitable companies.
Lesson learned: the kind of entrepreneurship I've most identified with and want to pursue wholeheartedly.
Lesson learned: the kind of entrepreneurship I've most identified with and want to pursue wholeheartedly.
April 11, 2025
Walker Deibel is an Aquisition Entrepeneur. He Buys established smaller companies, takes over as CEO, then continues to Build them.
He starts the book with the obvious. Most startups fail. Furthermore, starting a business costs money. It is surprisingly affordable, especially compared to this, to acquire an existing profitable company. Hence, there is a path to massively reduce risk for very little cost.
Deibel outlines the process of acquiring a company in a structured way. First, start with yourself. What do you want and where can you add value? You will be looking at a lot of companies and are dependent on people opening their doors, books and hearts for you along the way. This goes for existing owners, employees and customers, but also for brokers, suppliers and bankers. A solid articulation of what you bring and what you want is important.
Second, the book details the search for a company and how to value a small business - which is different from a larger business. The steps in the book helped me find local platforms and local brokers who sell companies. An interesting find in itself. Third, is the offering and negotiation phase with a breakdown of LOIs, Due Diligence, negotiation and closure. Words I had some familiarity with before this, but feel much more intimate with after the book.
The book concludes with suggestions for the first 90 days as CEO. Beyond this, it does not go much in the depth on the Build phase. There are, however, plenty of other business books out there on the topic so I am not too disappointed.
I borrowed this book from the Oslo public library in a paperback.
In sum, Buy then Build is a very good intro to micro scale Private Equity.
He starts the book with the obvious. Most startups fail. Furthermore, starting a business costs money. It is surprisingly affordable, especially compared to this, to acquire an existing profitable company. Hence, there is a path to massively reduce risk for very little cost.
Deibel outlines the process of acquiring a company in a structured way. First, start with yourself. What do you want and where can you add value? You will be looking at a lot of companies and are dependent on people opening their doors, books and hearts for you along the way. This goes for existing owners, employees and customers, but also for brokers, suppliers and bankers. A solid articulation of what you bring and what you want is important.
Second, the book details the search for a company and how to value a small business - which is different from a larger business. The steps in the book helped me find local platforms and local brokers who sell companies. An interesting find in itself. Third, is the offering and negotiation phase with a breakdown of LOIs, Due Diligence, negotiation and closure. Words I had some familiarity with before this, but feel much more intimate with after the book.
The book concludes with suggestions for the first 90 days as CEO. Beyond this, it does not go much in the depth on the Build phase. There are, however, plenty of other business books out there on the topic so I am not too disappointed.
I borrowed this book from the Oslo public library in a paperback.
In sum, Buy then Build is a very good intro to micro scale Private Equity.
November 8, 2022
Most products that we use on a daily basis were companies that were bought by others. McDonalds, Google Docs, Tesla, I’d argue the second time that Steve Jobs came back to Apple. None of these were the founders. They were the people who took a product market fit business and turned them into large scale businesses.
This book I’d argue is one of the best end to end books on how to be private equity/acquisition buyer of one. It goes through vetting different companies to but and how to actually execute the purchase the company. Highly recommend if you want to get into the private equity game as an individual.
This book I’d argue is one of the best end to end books on how to be private equity/acquisition buyer of one. It goes through vetting different companies to but and how to actually execute the purchase the company. Highly recommend if you want to get into the private equity game as an individual.
April 14, 2022
A hands-on, very pragmatic book about acquiring a small business.
Not too little but not too much information, just the right amount.
Not too little but not too much information, just the right amount.
December 29, 2025
Straightforward and simple without being patronizing, Deibel’s steps toward buying a business and the best practices thereof are excellent. For anyone contemplating buying a business, this would be an excellent place to start.
4.3/5.0
4.3/5.0
January 18, 2026
The book is a great introduction to buying a business. However you must do a lot more research beyond the book.
June 7, 2025
Habrá que ponerlo en práctica para juzgar
June 3, 2021
A "Must Read" for Entrepreneurs
Walker Deibel has written the most valuable book about the challenges and rewards of owning your own highly successful business. When read in conjunction with the available Audio Narration Walter's message is clear and easily understood...it is far better to Buy Then Build a business than to startup a new one.
Walker Deibel has written the most valuable book about the challenges and rewards of owning your own highly successful business. When read in conjunction with the available Audio Narration Walter's message is clear and easily understood...it is far better to Buy Then Build a business than to startup a new one.
July 27, 2019
This is an excellent book for all "would be" new business owners. The strategy outlined is spot on and is the type of advice I personally have given dozens of people over the years. The author, Walker Deibel, delivers on his promise to help "outsmart the startup game"!
December 28, 2020
Very little info (one short paragraph...) about the search fund model - instead assumes the buyer funds the acquisition using an SBA loan which requires a guarantee against your personal assets.
August 17, 2022
Inspirador y una buena guia sobre el proceso específico de como adquirir un negocio pequeño. Muchos conceptos y experiencias valiosas (SDE, multiplos, mentalidad comprador, contruir memo con lo que se busca, etc) y también conceptos mas basicos pero que siempre vale la pena repasar.
—————-
* p32. Riesgo asimétrico de posibilidad de exito entre entre startups (10%), VC backed startup (25%) y adquisición de emprendimientos (98% segun tasa de default de SBA)
* P46. Para emprender, antes de encontrar la compañia. Es importante tener claro los 3 atributos necesarios para manejar la empresa. Attitude, Aptitude and Action.
* P66. 4 cuadrantes de tipos de negocio que existen que es necesario identificar, enternable profitable, turnaround, high growt and platfom.
* P86. La razon por la que solo el 10% tiene exito. Es porque saben lo que quieren. Tipo de industria (producto, distribución o servicio), tipo de crecimiento, el tamaño de SDE y limitantes.
* P105. 2 alternativas para hacer el approach para la busqueda de comprar una empresa. Hablar directamente con la persona y decirle que utilice el servicio de un broker dado para trabajar la valorización, el que luego me dará preferencia. Ir a traves de un itermediario (broker) con un mandato específico para dar mas peofesionalismo.
* P121. Quiet light brokerage article on buythenbuild.com
* P136. Listado temas offering memoramdum. Asking price, name, lugar, producto o servicio ofrecido, numero empleados, rol de cada uno y sueldo, analisis clientes y concentración, razon de venta, plan de crecimiento mirando para adelante. A parte de info financiera.
* P180. Actitud correcta de humildad y de “venderse” frente al vendedor. Generar vinculo, credibilidad, meta en comun. Importancia de identificar las fortaliezas del vendedor para evaluar lo transferible del negocio
* P188. Importancia de reflexiones luego de primera reunion con el vendedor. Importante actuar, y orientarse al proceso para realmente entender que es lo que está buscando. Entender las tres As, evaluar las habilidades, saber el nivel de involucramiento y dia a dia que quieren, tamaño de SDE, etc.
* P192. Usar 5 fuerzas de porter para entender las particularidades del negocio y generar un business plan.
* P204. Para generar la estrategia usar el concepto del hedhegog. Intersección entre Pasion, aptitud y rentabilidad.
* P206. Business plan version resumida de Guy Kawasaki. “The only 10 slides you need in a pitch”
* P212. Libros sobre unicorn toolbox. Exponential organizations. Como apalancar tech modernas en industrias tradicionales. Libro sobre product subscription. Built to sell y automatic customer.
* P220. Compra de activos vs compra de acciones. Mejor para comenzar fresco en una nueva entidad
—————-
* p32. Riesgo asimétrico de posibilidad de exito entre entre startups (10%), VC backed startup (25%) y adquisición de emprendimientos (98% segun tasa de default de SBA)
* P46. Para emprender, antes de encontrar la compañia. Es importante tener claro los 3 atributos necesarios para manejar la empresa. Attitude, Aptitude and Action.
* P66. 4 cuadrantes de tipos de negocio que existen que es necesario identificar, enternable profitable, turnaround, high growt and platfom.
* P86. La razon por la que solo el 10% tiene exito. Es porque saben lo que quieren. Tipo de industria (producto, distribución o servicio), tipo de crecimiento, el tamaño de SDE y limitantes.
* P105. 2 alternativas para hacer el approach para la busqueda de comprar una empresa. Hablar directamente con la persona y decirle que utilice el servicio de un broker dado para trabajar la valorización, el que luego me dará preferencia. Ir a traves de un itermediario (broker) con un mandato específico para dar mas peofesionalismo.
* P121. Quiet light brokerage article on buythenbuild.com
* P136. Listado temas offering memoramdum. Asking price, name, lugar, producto o servicio ofrecido, numero empleados, rol de cada uno y sueldo, analisis clientes y concentración, razon de venta, plan de crecimiento mirando para adelante. A parte de info financiera.
* P180. Actitud correcta de humildad y de “venderse” frente al vendedor. Generar vinculo, credibilidad, meta en comun. Importancia de identificar las fortaliezas del vendedor para evaluar lo transferible del negocio
* P188. Importancia de reflexiones luego de primera reunion con el vendedor. Importante actuar, y orientarse al proceso para realmente entender que es lo que está buscando. Entender las tres As, evaluar las habilidades, saber el nivel de involucramiento y dia a dia que quieren, tamaño de SDE, etc.
* P192. Usar 5 fuerzas de porter para entender las particularidades del negocio y generar un business plan.
* P204. Para generar la estrategia usar el concepto del hedhegog. Intersección entre Pasion, aptitud y rentabilidad.
* P206. Business plan version resumida de Guy Kawasaki. “The only 10 slides you need in a pitch”
* P212. Libros sobre unicorn toolbox. Exponential organizations. Como apalancar tech modernas en industrias tradicionales. Libro sobre product subscription. Built to sell y automatic customer.
* P220. Compra de activos vs compra de acciones. Mejor para comenzar fresco en una nueva entidad
December 4, 2019
Well defended arguments to buy businesses
Walker does a very good job in the first half of the book laying out the arguments that being an entrepreneur and especially when buying a company rather than starting from scratch is the more profitable and bears a higher likelihood of success.
The second half of the book drills down to details what one needs to be mindful of throughout the acquisition process, from negotiation to looking at the balance sheet and checking cash flow. The accounting line items like accounts payable and accounting receivable and inventory.
What I liked about the book is more like the practical examples of how one applies for the SBA loan (like you need personal guarantee and you wouldn’t be able to get home line of credit afterwards) but the downside is that it is scarce in the real world examples of people who have conducted successful small business acquisitions and a profile of those buyers/sellers as well the businesses themselves. Walker made his first step into acquisition entrepreneurship through buying his own parents’ business, thereby peeking into the buyers and sellers’ sides simultaneously. This is probably not typical of others who are starting out. What I would have liked to see would have been more examples of people who have done search funds and what those are.
Walker does a very good job in the first half of the book laying out the arguments that being an entrepreneur and especially when buying a company rather than starting from scratch is the more profitable and bears a higher likelihood of success.
The second half of the book drills down to details what one needs to be mindful of throughout the acquisition process, from negotiation to looking at the balance sheet and checking cash flow. The accounting line items like accounts payable and accounting receivable and inventory.
What I liked about the book is more like the practical examples of how one applies for the SBA loan (like you need personal guarantee and you wouldn’t be able to get home line of credit afterwards) but the downside is that it is scarce in the real world examples of people who have conducted successful small business acquisitions and a profile of those buyers/sellers as well the businesses themselves. Walker made his first step into acquisition entrepreneurship through buying his own parents’ business, thereby peeking into the buyers and sellers’ sides simultaneously. This is probably not typical of others who are starting out. What I would have liked to see would have been more examples of people who have done search funds and what those are.
May 7, 2020
This was an all-encompassing "how-to" tutorial on acquiring a business. The author did a good job of articulating his over-arching premise/hypothesis: the statistics show it is generally more lucrative to buy an existing business than to start your own. Many traditional entrepreneurs fail, and with the baby-boomer population nearing retirement (many without a true succession plan), there is great opportunity to acquire durable/successful business at fair prices, be your own CEO, add value through your skillset, and grow/exit the business at attractive returns.
The author does cover all the basis from internalizing your skillset/interests, sourcing deals, raising capital, understanding financials, negotiations, the transaction process, and transitioning into the CEO and integrating your new team.
I would have rated it higher if there were fewer typos, and if it didn't read as much as a checklist (though that is likely appropriate). I do find the subject quite intriguing (which is why I read the book), and having gone through an acquisition and multiple tuck-ins, it was nice to take a step back and truly codify the process. Again, this was a great how-to on the process and roadmap for the acquisition entrepreneur, which I believe will be quite relevant given the current state of our economy.
The author does cover all the basis from internalizing your skillset/interests, sourcing deals, raising capital, understanding financials, negotiations, the transaction process, and transitioning into the CEO and integrating your new team.
I would have rated it higher if there were fewer typos, and if it didn't read as much as a checklist (though that is likely appropriate). I do find the subject quite intriguing (which is why I read the book), and having gone through an acquisition and multiple tuck-ins, it was nice to take a step back and truly codify the process. Again, this was a great how-to on the process and roadmap for the acquisition entrepreneur, which I believe will be quite relevant given the current state of our economy.
May 17, 2023
Great overview on buying businesses (and also in cultivating the acquisition entrepreneurship mindset). Still, many details presented by the author shouldn't be taken at face value; one should do its own research with trusted sources because many things can change since this was written (legal, finance, etc.). Moreover, this book doesn't get very deep into the nuts and bolts of valuing companies, but this shouldn't justify a lower rating (as given by other readers). There are entire books that address this topic, and even if the author had used 100 pages to address solely the DCF model (just as an example) you may still find people that have opposite opinions and discard its advice
Anyway, the greatest conclusion of this book is that buying a business isn't as intimidating as it sounds as long as one knows what he does (which is learnable, but requires time and experience). You shouldn't read this book and go out there the next week to buy a business. Either you're a professional with enough experience to do that or you don't. If you're not, you welcome troubles down the line. So be careful.
Anyway, the greatest conclusion of this book is that buying a business isn't as intimidating as it sounds as long as one knows what he does (which is learnable, but requires time and experience). You shouldn't read this book and go out there the next week to buy a business. Either you're a professional with enough experience to do that or you don't. If you're not, you welcome troubles down the line. So be careful.
February 10, 2025
It's a great book for someone contemplating going down entrepreneurial M&A path. I think it would have been made even better and a five-star material by consistently offering situational examples across a few different industries throughout. Walker offers both sound tactical and strategic advise -- figure yourself out first, decide what you want to buy within a framework offered, get upstream, remember that the fair price will reveal itself later, and actually be vested in business and process to succeed, unafraid to show enthusiasm, which doesn't mean you abandon critical thinking throughout.
- "For an entrepreneur, working hard for something they care deeply about is a life worth living."
- "It's the brokers who have the listings and the deal flow. As long as you are out there talking with all of them, you'll know where the deals are. Moreover, once you meet with half a dozen, you'll know who you can count on to help you find the company you're looking for."
- "88% of poor and below average financially healthy businesses have revenues under $1 million."
- "Growth costs money."
- "For an entrepreneur, working hard for something they care deeply about is a life worth living."
- "It's the brokers who have the listings and the deal flow. As long as you are out there talking with all of them, you'll know where the deals are. Moreover, once you meet with half a dozen, you'll know who you can count on to help you find the company you're looking for."
- "88% of poor and below average financially healthy businesses have revenues under $1 million."
- "Growth costs money."
February 10, 2026
In Buy Then Build, Deibel takes the view that there is an unbelievable opportunity to take part in what is often referred to as a "Search Fund". These are small to midsize businesses where an individual person can swoop in, purchase a business, and (ideally) sell it for a profit a few years later. It's essentially Private Equity on a smaller scale.
Deibel undeniably has experience in the area having gone through the process a few times. This is clearly a business model that needs to exist, as small business owners often encounter circumstances where they need to sell their businesses, and there are often good deals to be had at this sized firm. His take that networking is the key to the business is undoubtedly correct.
That being said, I do take issue with a few of Deibel's assumptions throughout the book. First, on the fact that now is the perfect time to be doing a search fund. This is despite the fact that number of people doing search funds has increased 40% YoY for the last 5 years, so clearly the market is becoming more saturated.
The next assumption is the idea that 10% is the minimum expected growth rate once the new owner takes over. It seems like he pulled this number straight from his ass. Growing at that rate, despite entering a new business, in a new location, with no pre-existing relationships, and skeptical employees and customers, is a fair weather assumption if I've ever seen one.
The final assumption is the idea that business school is the best way to prep for these sorts of goals. Why? Because a few top business schools offer programs on it. Why not go learn the industry, network, and get a job at company in the industry before trying to break in blind like a messiah.
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Deibel undeniably has experience in the area having gone through the process a few times. This is clearly a business model that needs to exist, as small business owners often encounter circumstances where they need to sell their businesses, and there are often good deals to be had at this sized firm. His take that networking is the key to the business is undoubtedly correct.
That being said, I do take issue with a few of Deibel's assumptions throughout the book. First, on the fact that now is the perfect time to be doing a search fund. This is despite the fact that number of people doing search funds has increased 40% YoY for the last 5 years, so clearly the market is becoming more saturated.
The next assumption is the idea that 10% is the minimum expected growth rate once the new owner takes over. It seems like he pulled this number straight from his ass. Growing at that rate, despite entering a new business, in a new location, with no pre-existing relationships, and skeptical employees and customers, is a fair weather assumption if I've ever seen one.
The final assumption is the idea that business school is the best way to prep for these sorts of goals. Why? Because a few top business schools offer programs on it. Why not go learn the industry, network, and get a job at company in the industry before trying to break in blind like a messiah.
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December 31, 2025
This book takes a practical look at buying a business instead of portraying it like abstract investment strategy. The author walks through how to narrow in on the right kind of business, how to approach brokers, what to look for in deals, and how financing actually plays out in the real world. It does a good job of showing why acquiring an existing business can be a smarter path than starting from scratch, but it also makes it clear that it takes real effort, discipline, and thoughtful due diligence. It felt realistic and sincere instead of hype-driven, which I appreciated.
What also stood out is how much of the advice lines up with what I have heard others talk about in interviews, YouTube discussions, and acquisition forums regarding things like managing the transition after the purchase, building trust with the seller, and focusing on steady improvements rather than big dramatic changes. The book helped me think more like someone stepping into an existing operation instead of chasing a new idea. Overall, I found it detailed, informative, and useful enough that I know I will return to it as a reference.
What also stood out is how much of the advice lines up with what I have heard others talk about in interviews, YouTube discussions, and acquisition forums regarding things like managing the transition after the purchase, building trust with the seller, and focusing on steady improvements rather than big dramatic changes. The book helped me think more like someone stepping into an existing operation instead of chasing a new idea. Overall, I found it detailed, informative, and useful enough that I know I will return to it as a reference.
February 19, 2020
Walker makes a compelling case to go off and buy a small business, especially compared to starting one from scratch. 7000+ baby boomers are retiring daily, and many of them have small businesses that need a new owner, and have growth potential. Buy at a low multiple, use debt, and grow.
After making the case, he then walks through how to go ahead and do it. He hits the major steps, from getting debt, thinking about due diligence, closing and transitioning, while avoiding gory detail.
I am growing quite interested in this path and really liked this guide. It suffered from some poor editing/grammar, and could have used a few detailed cases from his experience (rather than just saying he did it 6 times).
Reads more like a chronological guide of how-to so only fit for someone seriously considering the strategy or deeply curious about small business acquisition.
After making the case, he then walks through how to go ahead and do it. He hits the major steps, from getting debt, thinking about due diligence, closing and transitioning, while avoiding gory detail.
I am growing quite interested in this path and really liked this guide. It suffered from some poor editing/grammar, and could have used a few detailed cases from his experience (rather than just saying he did it 6 times).
Reads more like a chronological guide of how-to so only fit for someone seriously considering the strategy or deeply curious about small business acquisition.
March 15, 2024
As someone currently going on the acquisition journey, this book has been hugely helpful. I learned a bunch of what he writes about from working with a broker and evaluating many businesses, but I wish I'd known about this book before I started the process - it would've eased some of the learning curve.
One part that has been super important has been identifying my target deal. With so many businesses, and being a Maximizer (from Strengthsfinder), I tend to see how anything "could" work or be a good possibility. But there are simply too many businesses to evaluate if I look at everything, so holding close to my target makes the decisions about which to look at more closely a little more manageable.
I'm glad to have peeked into the future - past the furthest stage I've made (due diligence). I can't wait to put the rest of the stages into action!
One part that has been super important has been identifying my target deal. With so many businesses, and being a Maximizer (from Strengthsfinder), I tend to see how anything "could" work or be a good possibility. But there are simply too many businesses to evaluate if I look at everything, so holding close to my target makes the decisions about which to look at more closely a little more manageable.
I'm glad to have peeked into the future - past the furthest stage I've made (due diligence). I can't wait to put the rest of the stages into action!
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October 10, 2024I know I don’t have the full right to review this book yet since I've only finished about 30% of its content. However, the concept of acquisition entrepreneurship is incredibly intriguing to me! I've unintentionally been doing something similar. I’ve been managing my parents’ shop lately, and I managed to increase sales by 30% and set up several systems. The store grew tremendously, and we even managed to open a new branch within four years! So, taking over an existing business isn’t as risky as bootstrapping a new one from the ground up. Of course, it still requires a lot of work and sacrifice, but in the end, I’ve gained more capital than many of my friends who work regular jobs.
However, because I live in Indonesia, where there’s no concept of business listings or business brokers, some aspects of the book don’t entirely apply to me.
However, because I live in Indonesia, where there’s no concept of business listings or business brokers, some aspects of the book don’t entirely apply to me.
January 27, 2025
A good book on a topic I’ve never explored before: acquisition entrepreneurship.
The skinny: Starting a company is hard… and oftentimes unsuccessful. Why not skip the hard part and acquire an existing infrastructure and find a way to make it a little bit more efficient? Deibel elaborates on how to properly assess, value, and acquire existing companies for sale in a way that would be extremely helpful if you were interested in acquiring a company.
I bought this book because for one, the topic intrigues me, and two, I wanted to know how people on the BUY side value a company, so that as I build my company, I can make sure to track these numbers and emphasize them to intentionally increase the value of the company I’m building. With that said, a big number to track is EBITDA, and even more important: SDE (Seller’s Discretionary Earnings).
The skinny: Starting a company is hard… and oftentimes unsuccessful. Why not skip the hard part and acquire an existing infrastructure and find a way to make it a little bit more efficient? Deibel elaborates on how to properly assess, value, and acquire existing companies for sale in a way that would be extremely helpful if you were interested in acquiring a company.
I bought this book because for one, the topic intrigues me, and two, I wanted to know how people on the BUY side value a company, so that as I build my company, I can make sure to track these numbers and emphasize them to intentionally increase the value of the company I’m building. With that said, a big number to track is EBITDA, and even more important: SDE (Seller’s Discretionary Earnings).
August 3, 2023
This was a fantastic read that offers great insight into an often-overlooked form of entrepreneurship. I really enjoyed learning about Walker's process and the many fascinating statistics he brings to prove why acquisition is normally the way to go. The best part of the book for me was when he discussed the mindset needed for entrepreneurship in general. While he constantly tells readers not to make excuses, I do feel I am a little young to get into this quite yet (sorry for the excuse). However, this is something I would love to do a little down the line. I took away a lot of general info to help my current business and will definitely revisit this book a few times in the near future.
Favorite quote/stat: Only 4% of American businesses ever surpass 1mil in annual revenue.
Favorite quote/stat: Only 4% of American businesses ever surpass 1mil in annual revenue.
February 16, 2024
Buy Then Build is a great introductory book covering the small-market deal acquisition cycle from start to finish. Not a light read per-se, it took some time to work through this one, stealing chapters bouncing from weekend trip to weekend trip. This book definitely made me look at small business ownership through a different lens and reaffirmed that there is quite a bit of truth to small businesses being the backbone of America's economy.
The book does have its limitations; for instance, it is not going to give the level of detail one would need to perform complete financial or operational due diligence but it does cover all the key elements of an acquisition at a high enough level to be useful. Overall, this was quite an interesting read and one I'd recommend.
The book does have its limitations; for instance, it is not going to give the level of detail one would need to perform complete financial or operational due diligence but it does cover all the key elements of an acquisition at a high enough level to be useful. Overall, this was quite an interesting read and one I'd recommend.
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