Merger & Acquisition Tips! To Start 15 Tips and Strategies

Tip 1: Terms to know: EBITDA is what is used to determine a professionally managed business. SDE is what is used for owner-operated businesses.

Tip 2: One of the most effective ways to protect yourself is with an S.P.V. A Special purpose vehicle is an entity created specifically for your acquisition.

Tip 3: Investors bring capital, value, and solutions. Be what business owners want most. Be an investor.

Tip 4: One of the most powerful strategies you can leverage is the "Law of Price & Terms". If they get their price, you finance the deal on your terms.

Tip 5: My favorite industries for a great R.O.I. are Business Services, Information Technology, and Financial Services.

Tip 6: Business can fall into several categories for valuation multiples. You should always buy using the lowest and sell using the highest.

Tip 7: This is a numbers game. Typically 100 outreaches lead to 60 responses, 10 conversations, 5 offers that result in 1-3 deals.

Tip 8: When talking to a potential seller, you should ALWAYS ask them to tell you the "story" of this business. The info you get will be invaluable.

Tip 9: Future pacing is key. Ask every motivated seller "What would you do after you sold the business, if you were able to sell it?"

Tip 10: When possible, avoid Brokers. Brokers are not bad but they focus on selling the business for the highest price possible.

Tip 11: Remember, you don't need to acquire the entire business. You can acquire only the assets you are interested in.

Tip 12: The key to effectively buying and selling businesses is to stay off the Org Chart! The last thing you want to do is acquire yourself a job.

Tip 13: Facebook groups, websites, and email lists are among some of my favorite traffic channels to acquire for $0 out of pocket.

Tip 14: Buying businesses from motivated sellers is not about taking advantage of someone, it's about helping others in a mutually beneficial way.

Tip 15: How you structure your acquisition is just as important as how you finance the deal. Don't rush the process.

Tip 16: On average, professionally managed businesses will sell for a higher multiple than owner operated businesses.

Tip 17: Here's a simple formula to determine how profitable your acquisition should be: Your "Income Target" + "Growth Spend" = Your Target EBITDA

Tip 18: Networking with CPA’s, Local Real Estate Professionals, Business Brokers, Bankers and sharing with other service based professionals of your interest in buying and or selling could reep large returns. The Power of Ask.

Tip 19: One of the quickest ways to find great deals is to ensure everyone knows you are an Investor. If you don't share, people won't know.

Tip 20: Acquisition Ideas: Media/Leads, Ideas/Products, Team/Systems, Products and Services, Market Share, Monthly Recurring Revenue

Tip 21: There are 5 main ways to contact a seller: Warm Intro, Phone Call, Write a Letter, LinkedIn, and Reach Out Social.

Tip 22: The 4 factors you should consider when buying a business are: Your skills, interests/passions, experience, and connections.

Tip 23: There are 3 main ways to make money with acquisitions: On the buy, Cash on Cash, and with an Exit.

Tip 24: Our goal is to always take advantage of the opportunity, not take advantage of the person. Ethical deals are always a win/win.

Tip 25: Seller Financing is one of my favorite options. I always include "Seller Financing" in my opening offer (typically 80%).