Mike L.

This is my ETA story. At the beginning of this year I was laid off by SAP after 10 years. Got the news two days before my 40th birthday while on I was on vacation. Oh, and we had a baby on the way. Nice. After a 10 year successful career climbing the ladder it opened my eyes to the reality of corporate life. Everyone can be replaced. I was truly grateful for the life I had built through SAP, the skills I acquired, and the relationships that were formed. No one can take that away. It was at a major reflection point and needed to take time to think about, what is next? I had to figure out do I go back to corporate? Become my own boss? What about my family? How will this impact them? What will make us happy? Before my corporate life I had chosen an ETA path without understanding what ETA was. At 23 I bought the franchise restaurant I worked at in college. I had no idea what I was doing but I knew I wanted to be successful. My business partner and I scrapped together what little money we had and seller financed the rest of the deal. After 3 years owning and operating that business we decided to sell and join the corporate world. We had doubled the value of the business and I felt like I got an MBA at business school. After getting laid off I took 3 weeks away and decided to go through a life prioritization exercise. I had done both roles and understood the pros and cons. This was an important exercise to go through so I listed out my passions, long term goals, ideal day/week/month out, pros and cons list, would my son be proud of his dad, risk tolerance, etc. Entrepreneurship was calling my name so I dove head first back into the ETA (entrepreneurship through acquisition world). I spent hundreds of hours researching, listening to podcasts, audio books, talking with peers and connecting with business brokers to re-educate myself on entrepreneurship. Here are some people, content, and tools I used in my ETA search: @AcquiringMinds_ @walkerdeibel @Codie_Sanchez @ClintFiore @LeadershipAcad1 @SBA_Matthias @SMB_Attorney bizbuysell.com I signed 100+ NDA's to look at all different types of businesses. Laundromats, landscaping, IT businesses, home services, e-commerce, cell tower businesses, pet services, etc. Fun fact - mulch blowing businesses crush it. How you value a business depends on many factors. Most <$1M SDE businesses sell between 2-5x the multiple of their SDE (seller discretionary earnings). To simplify if a business has $500K in SDE it typically sells between $1M-2.5M. Here is a sample criteria I used on businesses I was interested in buying when I reached out to business brokers: -Cities I would look at -Min-max purchase price -Min-max revenue -Min SDE (seller discretionary earnings) -Industries I would look at -Minimum # of years in business (15 minimum for me) -No major customer concentration & consistent cash flow I engaged with a bunch of brokers/owners for 2 months and felt like I was getting nowhere. Am I an idiot for doing this? Am I spinning my wheels? The game changer for me was contacting a guest I had listened to on the podcast @AcquiringMinds_ that had been doing what I was trying to do for 10+ years. I did a cold reach out to him, told him my story, and asked him to be my business coach. He accepted and we started meeting weekly. Shout out to @signthefronts Those weekly meetings helped me stay on track and understand where to allocate my time. I could bounce ideas off of him and get real feedback on how he had handled each situation. After multiple failed attempts to go under contract, finally things changed. I found one. 31 years in business. Consistent cash flow. No large customer concentration. Checked all the boxes. Areas for operational improvement were in my wheelhouse. You gotta move quick because its a competitive market. I scrambled to get my offer submitted after meeting with the sellers and I was informed they had accepted another offer. My offer would be the backup offer. I was crushed because I thought this was the one. 15 days later I got a call that the other buyer dropped out because they had challenges moving out of state to Texas. You ready to re-submit your offer? Hell yeah I am! We were off the races on due diligence, lending requirements and moving to close. For those that don't know it is a quite the process to get financing for a business if you don't work with private investors. Here is what you can expect: -SBA 7a loan (75% backed by US govt) through a bank -Typical deal structure is some form of 5-25% down, 70-90% bank financed, and 5-20% seller financing -Personal financial statement -Forms, on forms, on forms -3 years financials from the business -Your business plan & 3 year financial projections -Signed purchase agreement -Business evaluation (like a house appraisal) -Life insurance -Working capital requirements -And a bunch of other stuff ill leave out🙂 All in all this was a 9 month process. We closed last month and I am 40 days in as the new owner. So what did I buy? R&R Lift is a 31 year old Material Handling Equipment service business that specializes in forklift repair. They have built an incredible customer base here in Austin and provide excellent service to keep these companies moving their products. Why did I go this route? Its the opportunity to do something different, grow a family business, build wealth, provide for my employees, and do something that my family can be proud of. For those still reading I hope this inspires you to do what is in your heart. Feel free to take a piece of what I wrote down, go after your own dreams and take action. -Shaugn