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Take Five #100: How much to budget for a self-funded search, and more

1. Ice cream shop growth snapshot

2. Helpful How-To on writing procedures that get results

The other key item is to share what the outcome will be. This makes it clear what the state of the company or the process will be afterward. I have found that this is one of the most important parts of writing a procedure. It makes sure that what you are expecting to be done, gets done. It also prevents people from stopping halfway through, thinking they have completed it, and not realizing the purpose. Last, it helps new procedure followers understand when something has gone wrong. They may follow all the steps, but never realize the outcome... telling them that something didn't go right. So, how does this person know they are done?

Outcome examples:

-All open invoices that were not previously sent out, have been sent to all customers via email or mail, according to their preference

-A look at the production dashboard will show all jobs performed, work done, and molds made for the day, starting with the initial 1st shift, and including the 2nd shift

Find the rest of Josh Schultz’s article here.

3. PE fund goes from $5m to $350m by acquiring one boring business at a time…

Had a Zoom call to a family office in the US.

Billions and billions of AUM. Of which $200-500m is invested in PE funds. $30-50m tickets.

He showed me one particular fund which invests in the dental or vet industry (forgot which it was). They followed a roll-up strategy and turned a $25m investment into $300m+ in a reasonably short period of time.

The first few years were slower: $5 million -> $8 million -> $11 million. And from there, whoop. $30m -> $60m -> $170m -> $350m+

$100m+ EBITDA

All through acquisition.

The IRR percentage is in the 80s.

Simply remarkable.

Read PrivatEquityGuy’s post here.

4. 18 ways SMB sellers drive up purchase prices

5. How much to budget for a self-funded search

Here’s a highly realistic scenario that I think self-funded searchers should be budgeting for:

-First 3 months: Getting systems set up, starting to look at deals
-3-9 months: Full searching, get first deal under LOI
-9-13 months: Go all-out on that deal, deal dies on 1-yard line, with tons of dead deal costs
-13-14 months: Be sad and lick your wounds
-14-18 months: Get back on the horse and start searching hard
-18-19 months: Second deal under LOI
-19-23 months: Complete diligence, finally close

Plenty of people have closed faster. But I think that’s the timeline you budget for, especially for one massive dead deal.

Read the Big Deal Small Business post here.

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