10:03:23 - This week in The Hub - Main Street Weekly
What you need to know about buying, growing or selling small to medium businesses. The news, the pods, the social influencers. Curated from the world of SMB (small to medium business)
We do the research and bring you what’s pertinent when you want to grow, scale, buy or sell your first or your next business.
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In the News, Blogs, and AI …
Mergers Make Headlines, But What Makes Them Work?
Mergers in the food and beverage industry have been going strong, with big F& B companies showing no shortage in their appetite for billion-dollar deals. J.M. Smucker Co. recently announced it would expand its family of brands significantly by acquiring Hostess for $5.6 billion, following a string of other acquisitions. And the urge to merge has been alive and well in F&B.
Monster Energy entered the alcohol sector with its $330 million acquisition of Canarchy Craft Brewery. Hormel FoodsHRL -0.8% announced a “transformative” $3.35 billion acquisition of Planters. J & J Snack Foods said it would buy Dippin’ Dots for $222 million. And those are only a few from a big menu of megadeals as F&B companies pursue growth by acquisition. (1734 words) Read more here…
Mergers and acquisitions have picked up pace lately, but numbers still down
Merger and acquisition activity, which can be seen as a market barometer, increased during the third quarter but remains well below 2022 levels, another sign of economic concern, Axios reports.
The value of U.S. M&A deals has fallen 23.7% to $875.6 billion year to date, compared to the same 2022 period, according to financial market data aggregator London Stock Exchange Group. The data runs from Jan. 1 to Sept. 27. Globally, M&A is also down across all major regions. (200 words) Read more here…
Merged Firms Offer Less Product Variety
How firms choose their post-M&A product portfolios sheds light on the synergies and cost reductions that mergers afford as well as the potential harms to consumers through reduced product availability. According to one set of models, M&A afford merging firms the opportunity to discontinue closely competing products so as to reduce costly duplication and profit-reducing product market cannibalization.
According to others, M&A allow firms to quickly scale up in certain product segments. As some of the acquired product lines will not align with the merged firm’s core competencies, these theories would predict substantial post-merger churn, with the products that are far from the center of the merged firm’s portfolio more likely to be spun off or shuttered. (1975 words) Read more here…
A Small Business Playbook for Navigating Growth
Entrepreneurship is a balancing act. A single misstep could derail an entire venture, irrespective of its size. But instead of getting overwhelmed by economic fluctuations, small business leaders need to discern patterns.
As emphasized in Roberto Vassolo and Natalia Weisz's book, Strategy as Leadership: Facing Adaptive Challenges in Organizations, contemporary firms regard leadership and strategy as intertwined concepts. After all, anticipating recurring challenges or prospects can offer small enterprises a headstart, allowing them to leapfrog less nimble competitors. (844 words) Read more here…
5 Big Data Tools Can Help Your Small Business Grow
In today’s data-driven world, businesses of all sizes are leveraging the power of big data to gain valuable insights, make informed decisions, and fuel growth. Small businesses, in particular, can significantly benefit from the use of big data tools to compete with larger enterprises on a level playing field. These tools help streamline operations, improve customer experiences, and increase profitability.
Here are five big data tools that can help your small business thrive: (words) Read more here…
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In the Pods …
The RICH don’t want you to know this -Codie Sanchez
The Hub Short Take
Codie Sanchez shares "the playbook that the rich are using to keep getting richer, and how you can start taking cues from their work". She highlights the ease of buying profits compared to building them and encourages listeners to work smarter, not harder. Codie breaks down the ten steps to buying a business and provides insights into each step.
Watch it here. Read our review here.
The Takeaways
Business ownership is crucial for a thriving society, and decentralization is the solution to the concentration of power in the hands of a few.
It is easier to buy profits than to build them, and the key is to leverage other people's money through leveraged buyouts (LBOs).
The current market conditions, including the retirement of baby boomers and the economic impact of COVID-19, present opportunities for acquiring businesses.
The "get rich tripod" consists of cash, experience, and sweat as leverage for acquiring businesses.
The Quotes
"It's easier to buy a business than to build one."
"The average small business hasn't raised their prices in eight years."
"The world gets better when all of us have skin in the game."
"Buy when there's blood in the streets, even if that blood is your own."
Dirk Sahlmer Discusses SaaS Group's Acquisition Strategy And Growth Plans - How2Exit - E145
The Hub Short Take
Dirk Sahlmer, the Head of Origination for SaaS Group, shares his journey from being a mechanical engineer to working in the SaaS industry. He discusses how SaaS Group acquires and integrates SaaS companies, their focus on horizontal businesses, and their plans for future acquisitions. Dirk also talks about the challenges of deal origination and the importance of building relationships with founders.
Watch it here. Read our review here.
The Takeaways
Dirk emphasizes the importance of building relationships with founders and staying on top of their minds when they are considering an exit.
Automation tools, email campaigns, AI, and machine learning functionalities can be used to generate M&A opportunities before building a big team.
SaaS Group's acquisition target includes companies with revenues above 1 million AR, close to profitability, and preferably in the horizontal product growth space.
Dirk can be reached via email (dirk@saas.group), LinkedIn, or the SaaS Group website form.
The Quotes
"The best companies I've seen are not on LinkedIn at all. They are not really active. The founders are flying under the radar." - Dirk Sahlmer
"We are trying to show that we know what we're doing. It's not just some ex McKinsey guys that thought, 'Hey, let's just acquire businesses.' It's very hands-on, very entrepreneurial." - Dirk Sahlmer
The Guest
Dirk Sahlmer is the Head of Origination for SaaS Group. He has a background in mechanical engineering and entrepreneurship, and he joined SaaS Group in 2020. Dirk is responsible for deal origination and works closely with founders of SaaS companies to explore acquisition opportunities.
What Multiple of SDE to Pay for the Risk? Quit your job, Self Employment, SMB Acquisition - David C Barnett
The Hub Short Take
In this episode, David C. Barnett answers a subscriber's question about the price one should pay for a business compared to the risks involved in staying in a job. He discusses the concept of multiples in small business pricing and emphasizes the importance of understanding the context and size of the business being evaluated. David also explores the risk factors associated with owning a business versus being a W-2 employee and provides insights on how to manage and mitigate those risks.
Watch it here. Read our review here.
The Takeaways
Understanding the context and size of a business is crucial when evaluating pricing multiples.
The average multiple for businesses under half a million in SDE is around 2x.
Risk in owning a business is spread across the customer base, whereas losing a job means losing 100% of income.
The real risk in owning a business is not losing customers but not acquiring enough customers fast enough.
The Quotes
"The question of risk: having a job versus a small business. If you lose your job, you lose 100% of your income." - David C. Barnett
"The real risk is in not getting enough customers fast enough." - David C. Barnett
The Host
He specializes in buying, selling, financing, and managing small and medium-sized businesses. With years of experience in the industry, David provides valuable insights and advice to entrepreneurs and business owners.
How to Buy the Business Where You Work | Corey Veverka Interview
The Hub Short Take
Corey Veverka shares his journey of buying the business where he worked and provides insights into the process of acquiring a business. He discusses how he was recruited by the owner, the initial offer to potentially transition into ownership, and the challenges he faced in financing the deal. Corey explains the nature of TBS's business and its revenue model, highlighting the project-based nature of their work.
Watch it here. Read our review here.
The Takeaways
Corey's journey of buying the business where he worked highlights the potential for employees to transition into ownership.
Financing the deal was a challenge, but Corey was able to secure an SBA loan to acquire the business. Refinancing the SBA loan allowed Corey to secure a fixed rate and alleviate the personal guarantee requirement.
TBS specializes in validation and compliance for pharmaceutical manufacturing facilities, primarily through project-based work. The industry is competitive, but TBS differentiates itself by providing high-quality services and building strong relationships with clients.
Buying a business involves emotional considerations, such as the financial implications and the need to align with personal goals.
The Quotes
"Ownership of a company is kind of Life Amplified, so the highs are higher and the lows are lower." - Corey Veverka
"The SBA loan has a 10-year term, which allows for cash flow and makes it easier to pay off the note." - Corey Veverka
The Guest
Corey Veverka is the owner of TBS, a company that specializes in validation and compliance for pharmaceutical manufacturing facilities. Corey started his career as a mechanical engineer and worked his way up to a leadership position in the industry. In 2002, he was recruited by TBS and eventually became the owner of the business in 2015.
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Founding Member Shout-Out
Shout out to our new founding member, with over 30 years in M&A, this company offers a Resource Center helping you buy good businesses. Very underpriced - get it now before they finish upgrading the site and very likely up the pricing.
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In the Knowledge
SCORE Mentoring: A Free Resource for Entrepreneurs Seeking Growth
Let's face it: starting and growing a small business in the U.S. is hard. There's a reason why so many more people opt for traditional employment despite the endless potential that comes with entrepreneurship.
One of the most important things I've learned throughout my years both as a freelancer and an agency owner is that you can't be an island. If you think you have all the answers, your growth will be limited. (1643 words) Learn more here…
Social media experts share what every small business owner should know
Hundreds of small business owners and experts share their solutions with Yelp every year on how to overcome the biggest challenges in entrepreneurship—and social media is a hot topic. According to a 2023 study, nearly half of American consumers have made a purchase through social media, making these platforms an important tool for small business growth.
Whether you’re just getting started on social media or looking to enhance your content, business owners have a lot of questions: Which platforms make sense for my business? How do I balance content creation while managing a business? And how can I market myself online while staying true to who I am? (1250 words) Learn more here…
Navigating The Six Entrepreneurial Eras Of Business Growth
As a serial entrepreneur with over 40 years of experience, I know that it is vital to not only recognize the eras of your venture journey but to understand why each era is important and necessary. You sometimes need to go through heartbreak before you find your prince charming.
1. Inspiration Era
For entrepreneurs, the critical challenge of the inspiration era is to overlay discipline and perspective upon vision. This entails listening openly to others who are less immersed in the vision of the start-up. (918 words) Learn more here…
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In the BIG Guys Corner … (middle market and above)
Bridgepoint explores sale of Humanetics Group for $1.5 billion, sources say
Private equity firm Bridgepoint Group Plc (BPTB.L) is exploring a sale of Humanetics Group that could value the safety systems technology provider at about $1.5 billion, including debt, according to people familiar with the matter.
London-based Bridgepoint has tapped investment bank Evercore Inc (EVR.N) to advise Humanetics on its sale process that is expected to attract the interest of both strategic and private equity buyers, the sources said, requesting anonymity as the discussions are confidential. (350 words) Read more here…
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In the Sosh … who to follow this week
Justin Mecham
"Overwhelmed by leadership challenges, drowning in a sea of tasks, or struggling to unlock your full potential?
My daily tips WILL help.
Connect with Justin on LinkedIn,
Nate Ginsburg
10+ year online entrepreneur, investor and Yogi. My main gig is as CEO of Centurica which is the premium provider of buy side due diligence services for online acquisitions.
Connect with him on LinkedIn, or X at NateGinsburg
In the calendar …
The Exit Meetup by Flippa, In a City Near You Soon
The Exit Meetup is a local meet-up for like-minded business owners.
Meet others, and talk about growth and the opportunity to buy or sell. Plus, hear from a successful acquisition entrepreneur. This is an informative and entertaining meetup aiming to connect owners and investors in a fun environment. Check it out...
SMB Acquisitions Entrepreneurs Bi-Monthly Networking
A twice-monthly networking meeting where acquisitions entrepreneurs come together online to build teams, share ideas and resources, and help each other succeed. The first and Third Tuesday of each month. Check it out...
Women’s Small Businesses Show Remarkable Growth Despite Stiff Challenges - Oct 3, 2023 - White Plains, NY
October 3rd symposium at the Sonesta Hotel in White Plains will help local woman entrepreneurs overcome their toughest obstacles. The event kicks off National Women’s Small Business Month.
Speakers from SCORE, Mastercard, Community Capital New York, Women’s Enterprise Development Center, successful local entrepreneurs, and more will share lessons learned. Check it out…
Rice's Entrepreneurship through Acquisition Conference - Saturday, October 14 - Houston, TX
The State of Search in the U.S. Conference focuses on search fund entrepreneurs, bringing them together with investors, students, and faculty. By Rice Entrepreneurship Association. Check it out...
10th ANNUAL ENTREPRENEURSHIP THROUGH ACQUISITION CONFERENCE - Wednesday, November 1, 2023 - Chicago, IL
The Booth-Kellogg ETA Conference is an annual event that brings together search fund entrepreneurs, investors, MBA students, faculty, and other participants in the ETA ecosystem to meet one another and share insights into this rapidly-growing area. The 10th Annual Booth-Kellogg ETA Conference at the Marriott Magnificent Mile | 540 Michigan Ave, Chicago, IL. Check it out...
Main Street Summit - November 8-9 - Columbia, MO
A festival for SMB owners, operators, and investors.
An immersive two-day experience for small to medium-sized businesses with ~10-500 employees. Choose your own adventure amongst a diverse set of presentations, interviews, debates, workshops, and conversations.
Every business has a birthplace and it’s never too far from Main Street. Check it out...
Capital Camp - May 21-23, 2024 - Columbia, MO
Capital Camp is an upcoming event scheduled for May 21-23, 2024, in Columbia, Missouri. The event is described as a gathering for "curious, kind, and thoughtful investors, capital providers, entrepreneurs, and executives" who are pushing boundaries and breaking new ground. The event spans three days and three nights, offering serious investing conversations in a relaxed setting—think shorts and sandals rather than suits and ties. Attendees can expect interactive programming, a variety of outdoor activities, and an endless supply of food, drink, and entertainment. The event has received high praise from past attendees, with many describing it as the most valuable and best investing conference they've ever attended. Check it out…
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