April 30, 2025 • 27 mins
Andrew Gazdecki is a seasoned entrepreneur, 4x founder, and the CEO of Acquire.com, a platform transforming the startup acquisition process. With a passion for building businesses, he has successfully founded and exited multiple companies, including Bizness Apps, which he scaled to $10M ARR before its acquisition, and Altcoin.io. Through Acquire.com, Andrew has helped hundreds of startups get acquired, facilitating over $500 million in closed deals. His mission is to make M&A more accessible for bootstrapped founders and small startups, giving them the tools and resources to achieve successful exits.
A recognized thought leader in entrepreneurship, SaaS, and startup acquisitions, Andrew’s insights have been featured in major publications such as The New York Times, Forbes, The Wall Street Journal, TechCrunch, Inc.com, and Entrepreneur Magazine. With a social media reach of over 350,000, he actively shares expertise and lessons learned from his journey to help the next generation of founders. When he’s not simplifying acquisitions, Andrew enjoys cars, skateboarding, and surfing.
During the show we discussed:
- Steps to prepare a business for acquisition
- How Acquire.com streamlines M&A for startups
- Common founder mistakes when selling
- Maximizing startup valuation
- Preparing for due diligence
- Financing strategies for bootstrapped founders
- Using debt or equity to boost valuation
- Credit and financing impact on acquisition readiness
- Role of cash flow in exit planning
- Bootstrapping vs. raising capital
- Buying a business with limited resources
- Financing options for business buyers
- Risks vs. rewards of buying vs. starting a business
- Tips for first-time business buyers
- M&A trends affecting small businesses
Resources:
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to the Business Credit and Financing Show.
Each week, we talk about the growth strategies
that matter most to entrepreneurs.
Listen in as we discuss the secrets to
getting credit and money to start and grow
your business.
And enjoy as we talk with seasoned business
owners, coaches, and industry leaders on a variety
(00:22):
of topics from advertising and marketing to the
nuts and bolts of running a highly successful
business.
And now, to introduce the host of our
show, financial expert and award-winning author, Ty
Crandall.
Hello, and thanks for joining us today.
I'm super excited you could be here because
today we're talking about exiting your business at
the maximum value.
(00:43):
Look, everybody messes this up.
And the problem is, as an entrepreneur, you
probably bank your retirement on what you're going
to get out of your business when you
exit.
But I can tell you that of every
friend I've ever had that's exited their business,
all of them wish they knew what we're
gonna be talking about today while they were
building the business.
For them, they've got multiple maximum values.
(01:03):
Matter of fact, a lot of them left
millions, if not tens of millions, on the
table because they didn't know how to exit
properly.
And so what we're gonna talk about today
is we're gonna talk about how to prepare
for a successful acquisition of your company.
And there's a lot of things that I
think you're gonna learn about this of both
acquiring another company and getting acquired yourself.
So a lot of different things that we're
gonna be able to go over.
So with us today is Andrew Gazdecky.
(01:25):
Now, Andrew is a seasoned entrepreneur, four-times
founder and the CEO of Acquire.com, a
platform transforming the startup acquisition process.
Now, with a passion for building businesses, he
has successfully founded and exited multiple different companies,
including Business Apps, which he scaled to 10
million ARR before his acquisition, and Outcoin.io.
(01:49):
Through Acquire.com, Andrew has helped hundreds of
startups get acquired and facilitated over $500 million
in closed deals.
His mission is to make M&A more
accessible for bootstrapped founders and small startups, giving
them the tools and resources to achieve successful
access.
Now, he's a recognized thought leader in entrepreneurship,
(02:10):
in SaaS and startup acquisition.
Andrew's insights have been featured in major publications,
including the New York Times, Forbes Magazine, the
Wall Street Journal, TechCrunch.com, and Entrepreneur Magazine
as well.
With a social media reach of over 350
,000 people, he actively shares expertise and lessons
learned from his journey to help the next
(02:32):
generation of founders.
When he's not simplifying acquisitions, Andrew enjoys cars,
skateboarding, and surfing.
What's up, Andrew?
Thanks for coming on the show with us
today.
Yeah, thanks for having me on, Ty.
I appreciate the intro, that was awesome.
Well, based on all this, you have like
the coolest life ever, if that's what it
sounds like.
I could have just summed it all up
to say he has the coolest life ever
and it would have worked.
Yeah, I appreciate that, thanks.
(02:54):
So let me ask you, when you're talking
about getting acquired in small businesses, what do
you find that some of the biggest things
that founders overlook that they should be doing
from the beginning to be able to exit
at multiple value?
Definitely, I would say right at the top
is just understanding what a sellable business looks
like.
So just basic things.
(03:14):
I think a lot of entrepreneurs also overcomplicate
it.
So can the business run without you in
the business day-to-day?
I think that's a big, big, big one
that a lot of entrepreneurs and founders just
overlook.
A lot of buyers aren't gonna wanna buy
a business where when you step away for
a day or a couple hours, everything catches
on fire.
And then also looking at, do you have
processes documented?
Do you have SOPs?
(03:35):
Do you have basic things like a training
manual?
One tip here could be to just go
through your day-to-day with every department
and just start documenting things.
This can be used for onboarding new employees.
This could be used to strengthening your existing
team and your existing processes.
But just having some sort of operational manual
to let others know how this business run
is huge.
(03:55):
And then when you start meeting with buyers,
sharing that is gonna make things a lot
easier.
So again, things like making sure that the
business isn't heavily relying on you, having SOPs
and processes documented, having good metrics as well.
So I typically work with software companies.
So we look at things like, how durable
is the revenue?
Is there really high churn or cancellations?
(04:17):
Which essentially just means, do you have a
good product?
Or do you have a way to repeatedly
attract new customers into the business?
Is there some form of scale to the
business?
Or is it kind of a just getting
off the ground type business?
And then just packaging all this together properly,
outlining the types of buyers that would be
interested in potentially acquiring your business.
(04:37):
Being able to articulate all of this to
them.
Those are some things that are top of
mind.
We can get more into the details, but
those are usually the biggest chunks.
So I find that a lot of founders
have this tendency, like when we start a
business, we have no money and a lot
of time.
So founders basically take on every role, right
from the beginning, right?
Then I find that a lot of founders
are so obsessed with their ability to do
(04:59):
those things that they have a hard time
handing them over to other people.
Is this something that you see is pretty
common with founders and how do they get
out of that trap to start to delegate
so they're not in the business, they're actually
working on the business?
100%, it's one of the hardest transitions for
any entrepreneur when you're building a business is
you just have to let go.
You have to hire people that are typically
(05:20):
smarter than you or specialize in the roles
that you're consistently doing day in, day out.
And just like a piece of advice for
that would be, let's say it's like a
sales role.
Like you were the lead salesperson.
At some point, you're gonna need to hire
a salesperson and to do that, you're gonna
need to train them to make sure they
understand your customer, the pitch.
How do you run these sales calls?
So starting right there, you can start writing
(05:42):
down what does the script look like?
What are common questions that prospects ask you
on these calls?
What are your common flow style for the
call?
And that right there is an SOP, just
document your sales process.
Now you can hire someone, train them with
it.
So you can do that across every department.
But yeah, generally, it's one of the hardest
things to do for entrepreneurs.
I struggle with it myself.
(06:03):
So that right there can increase the value
of your business immediately.
Is there a good way to track SOPs?
Do you have technology or advice for founders?
Because I think a lot of founders don't
do this.
They're not tracking every position in that company
and the role of what that position does.
What's the best way, if they haven't done
that so far, to get started doing that
(06:24):
for them and their team?
I think step one is just open up
a Google Doc.
It doesn't have to be super fancy.
Whatever works for you.
If you use Notion Doc or another type
of note-taking app, just start writing down
what the processes are for that department.
So another example would be marketing.
How do you attract customers into the business?
Is it organic search?
Is it paid ads?
If it is paid ads, what is the
(06:46):
week-to-week or day-to-day management
for the paid ad accounts?
Are you constantly looking at different types of
key terms?
You have to manage different budgets.
If it's social media, how often do you
post?
How do you make the content?
And then right there, you have a simple
SOP for your marketing strategy and how you're
attracting new leads or new customers into the
business.
And then you can hire someone, train them
(07:06):
with that document.
And it can get obviously way more detailed
than that, but just that basic sort of
how does sales run?
How does marketing run?
It's huge.
And all you really need to do to
get started is just think about what does
that look like on a week-to-week
basis?
And just write it down in Google Drive
and just keep it there.
So I think valuation is something that a
lot of us are just confused about.
(07:26):
Maybe because there's so many different ways to
value a business.
But what should we be thinking?
What do you teach your founders that we
should be thinking about as we're building the
business of things that are very important that
will have to do a lot with the
exit value?
We talked about SOPs, obviously, right?
And we talked about not working in the
business, but what are some things we should
be paying attention to?
(07:47):
Like, are we paying attention to, like you
said, like a cohort analysis?
Are we looking at how long we're retaining
that customer?
Or what are some of the main things
that founders just overlook oftentimes that are really
important for them getting maximum value in the
exit?
Definitely.
I think having bad business models can really
destroy a valuation.
Like if it has a business model where
(08:08):
it's just all one-time fees or something
like that, and it's a SaaS product.
And the reason for that is the new
buyer is gonna have to manage all of
these customer relationships and they're not generating any
additional revenue from doing so.
So you're gonna get a heavy discount from
all these one-time fees that you may
have incurred during the life of the business.
So that's a big one.
Another one would be having too much customer
(08:29):
concentration.
So what that can mean is you have
one really large customer that takes up 20
to 30 or even more than that, 50
% of your revenue.
And what that tells a buyer is that
the revenue is just, it's risky, where if
they buy the business that customer leaves, the
valuation can drop by up to 50%
or more.
So those are two ones, just thinking about
building the business in a way where you're
(08:51):
generating revenue every single month from your customers
and then not being so reliant on one
really, really large customers.
Those can be deal coders in my experience.
What about financing?
What do you talk to founders about along
the way of building a business?
And I think about this because when I
look at Harvard graduates, like one of the
benefits they have is the people they meet
while they're in school.
And then a lot of them are launching
(09:12):
endeavors and right out the gate, they're going
out to raise capital, right?
Somebody like me, like I never learned any
of that.
I mean, I bootstrapped it from the ground
up.
And I have a large part of our
audiences that same way where I think they're
used to bootstrapping, not used to VC or
angel.
So what do you say about that?
When you're helping founders kind of build up,
do you advise them that they borrow money
(09:33):
or access capital to do it?
Do you advise that they access debt?
Do you advise that they access equity financing?
Like what are those conversations like?
What helps a startup get the money they
need to actually get to a point where
they can be acquired?
Definitely.
I think the first thing to do there
is to understand what you're trying to build.
I think a lot of entrepreneurs go out
to raise capital and they're not essentially trying
(09:54):
to build a multi-billion dollar business.
It's a business that could be worth 10
or 20 or 30 or 40 or $50
million, which is a huge business.
That is a massive windfall for an entrepreneur.
But once you take on venture capital for
a business like that, it kind of breaks
all of that down because you're going to
have to be pushing the business in ways
that may not be a smart thing to
(10:15):
do to get to the larger outcomes.
Think of it as like boom or bust.
So that's the first thing.
What kind of business are you building?
Is this a true multi-billion dollar opportunity?
Do you really want to build a business
like that?
And then if so, why is a good
question as well.
Because when you go to sell your business
as well, if you've raised a lot of
venture capital, you're going to have to typically
pay back your investors at a one-time
(10:35):
liquidation preference.
Which essentially means if you raise $5 million,
then when you go to sell the business,
investors are paid back first, which is going
to take from your final exit amount.
But again, it just depends on the entrepreneur.
I would recommend bootstrapping.
I think you generally will build better businesses.
That way you really are forced to speak
with customers, get really close to them, because
(10:56):
they're the ones paying the bills.
But again, I think it's a very personal
question and it is really going to be
based on personal ambition and market opportunity, in
my opinion.
I appreciate that.
Andrew, another thing I see a lot of
our tribe struggles with is that they're so
affixed on top-end revenue, what they're selling,
not what they're collecting or margin, right?
And I see a lot of entrepreneurs make
this mistake.
(11:17):
They even boast, they brag about it, right?
So what's your advice about cashflow management or
really focusing on margin?
And how important truly is it?
Because we hear that EBIT is so important
and profit margin is so important, but give
me a rundown of that, of looking at
the profit margins and the net versus necessarily
the gross.
Totally.
(11:37):
I think it depends on how fast your
business is growing.
So what I typically see is, related to
valuation specifically, we see two types of multiples.
We see revenue multiples and we see EBITDA
multiples or net profit multiples.
We'll see revenue multiples if the business is
growing really fast, so 100% year over
year.
There isn't a lot of profits in the
(11:58):
business because they're investing everything to grow faster.
Those are rare outcomes.
That's where, again, the business is expanding very
quickly and the most logical multiple to give
the business is a revenue multiple.
More commonly would be a profit multiple where
the business has slower growth, sometimes stagnant or
declining, and those businesses, it's really important.
(12:19):
If it's slow growth and there's not a
lot of profit, then that business essentially isn't
sellable.
So if you're not focused on building a
profitable business and it's not necessarily growing very
fast, it may not be worth anything to
buyers.
So if you're in a situation like that
where it's not growing and it's not profitable,
you need to make the business profitable if
you wanna exit it, in my experience.
(12:39):
And how do we figure out what multiple
we may have?
Because I think a lot of our tribe,
too, struggles to know what industry they're actually
in.
And I mean, it sounds crazy, right?
They might say I'm in real estate, but
if you're really looking at NIAC, so there's
like 30 subcategories of real estate you could
be in, for example.
So how do they figure out, can they
even make the determination?
You look at Credit Suite, we are a
(13:01):
software company on paper, but we also are
an education company because we do education, we
do business credit financing.
So how do we figure out what multiple
we may have in the industry that gives
us the highest multiple?
Yeah, you can look at comparables, so like
similar businesses that have sold that could be
competitors or in a simple market segment that
you're in.
But generally there are rules of thumb, like
(13:22):
SaaS businesses will sell for anywhere from three
to 10 times net profit.
So you typically will have some sort of
range.
This is also simplification, but if you go
on like ChatGBT and just ask, like, hey,
what are the multiples for my business?
Can you find five examples of similar businesses
that have sold with multiples?
That'll give you a range as well.
(13:43):
Because valuation is also part art, part science.
So you don't want to just say, this
is exactly what the business is worth.
You just want to have kind of a
ballpark figure.
Well, what do you see happens with somebody
exits in due diligence?
Like what kind of due diligence thing come
up where somebody's trying to exit and they're
like, oh man.
And they get caught in something to do
with due diligence that's common that they didn't
(14:04):
think about that lowers the value.
Because they hear this all the time, right?
Somebody comes in and says, your business is
worth $10 million.
But then when they get in and start
doing the due diligence, then all of a
sudden they find this, don't like this, don't
like this, and it reduces that.
So like, what can we be focusing on
that we don't get to that final stage
of selling our business and go, oh man,
I didn't know that stuff would really hurt
me as much as it did during that
(14:24):
due diligence period.
Yeah, definitely.
I think the big one there, which is
also kind of an obvious thing, is just
surprises.
If you're going into due diligence with a
buyer.
And now a quick break to hear from
our sponsor.
Hey, it's Ty Crandall with Credit Suite.
Many of our subscribers want to get the
most money to grow their business at the
best terms.
Whether you're looking for startup capital, low interest
(14:46):
credit lines and loans, or business credit, we
can definitely help you.
So give us a call at 877-600
-2487 or schedule your free consultation at creditsuite
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money you can get approved for today.
Just assume they're going to find out everything,
both good and bad.
And so you want to get in front
of any bruises or bad parts of your
(15:07):
business or things that may just appear not
good.
That could be a customer's canceling.
It could be bugs in your product.
It could be an issue with a former
teammate.
Whatever it may be, just be upfront about
that with the buyer rather than the buyer
finding it on their own.
It's a big surprise.
And now the buyer's thinking, what else could
be wrong with this business?
(15:28):
What else am I going to find out?
And that can completely derail an acquisition.
So just any sort of surprises or anything
that maybe could be improved on the business,
just be upfront about it.
Acquire, acquire.com.
First of all, what the heck?
How'd you get the name?
How'd you get the domain acquire.com?
I got, I had just out of curiosity.
I got to know that.
Yeah, yeah.
The short story there is I actually reached
out to the owner like four years ago.
(15:49):
I got the domain about a year and
a half, two years ago.
He wanted 900,000 for the domain.
I obviously said that was too high and
then ended up buying it for 200,000.
Well, that's pretty cool.
So just diligence.
Yeah, he just reached out and said he's
looking to sell it.
I said, this is the most I could
possibly pay and transacted, actually when I was
on vacation with my family.
So were you already acquire before then?
(16:12):
You just didn't know an acquire.com?
No, we were called micro acquire.
And so we dropped the micro and now
we're just acquire.com.
That's pretty cool.
So how can, and how does acquire help
a small business owner better position themselves for,
to be acquired?
Definitely, we've created a platform where we give
you access to essentially more buyers than you
(16:33):
could possibly ever reach on your own or
with another M&A advisory firm.
We also walk you through the acquisition process
step-by-step with hands-on support.
So from valuation to preparation to buyer outreach
to creating the initial listing or SIM creation
or financial recasting, we're with you every single
step of the way to make sure that
you truly maximize your acquisition.
(16:54):
So is this, how do you compare this
to an investment banker going through a firm
that helps me actually potentially sell my business?
We like to think of ourselves as a
tech-enabled investment bank where we leverage data
to access the most specific buyers that are
interested in acquiring a business like yours.
For example, we have over half a million
buyers registered on our platform and we collect
(17:15):
information on everything that they're looking to acquire.
So if you are a SaaS business with
more than a million in revenue in the
MarTech space, we can specifically outline buyers that
are actively looking for acquisition targets like yours.
So we essentially are more efficient at selling
businesses than other options.
So if we flip it a little and
let's say that a lot of insight about
(17:36):
selling our business, what if I want to
acquire?
Like what's some of your best advice if
I'm a business owner, I own a business
here, I own Credit Suite, and I see
another business I want to acquire.
So in that case, like what's some of
your best advice for me to be able
to acquire another business?
Definitely.
I think due diligence is gonna be huge.
Definitely if you haven't gone through a process
(17:56):
like this, you can hire third-party firm.
We have referrals for this where you can
do something called a quality of earnings check
where you can review all the financial information
to essentially verify that it is accurate and
isn't less or more than maybe what the
seller is representing.
But also getting an understanding of what are
you truly looking to acquire and why.
(18:16):
We have hundreds of businesses listed on the
Acquire platform that range from $50,000 all
the way up to tens of millions of
dollars.
So are you looking to expand into a
new market?
Are you looking to expand your products or
services?
Are you looking to potentially acquire a business
rather than starting a business?
Outlining that to narrow down your search I
think is key.
(18:37):
So how do I get financing for this?
And I think that's one of the biggest
questions maybe you get, I definitely hear it
too on the acquisition side.
What are some of the best options you've
found for a small business or for somebody
that's looking to acquire a business to get
the financing you need to do so?
Definitely.
From my experience, there's really two routes.
There's typical SBA bank financing.
That's for acquisitions up to $5 million.
(19:01):
You can go larger than that, but the
loan size is up to 5 million.
Those are gonna be typically harder to get
and you're gonna need to give a personal
guarantee with your bank.
So if you're interested in that, you can
go to your local bank or whoever your
business bank's with and you can ask about
their SBA loan process.
We also have referrals for that as well.
There's some strict requirements to get those types
(19:21):
of loans.
Specific types of businesses, they need to meet
a certain level of profitability.
They aren't for unprofitable businesses.
So that's the main use case for SBA
loans.
Then the second option is gonna be to
get financing from investors.
So that'd be where you locate a type
of acquisition that you wanna close and you
(19:42):
leverage either investors that you know or the
existing investors in your business.
What are the biggest rewards of doing this
versus building?
And I read a great book, I don't
know if you ever read it, called I
think Buy Versus Build.
And so from your perspective, what are some
of the best benefits and drawbacks, the pluses
and minus of acquiring a business versus building
it from scratch?
(20:02):
Definitely.
I think for the software industry or the
startup industry specifically, you're able to essentially skip
over the hardest part of building a startup,
which is where you're finding product market fit.
You're scraping and clawing to get a handful
of customers, figure out the pricing model, what
features are actually important.
We work with a lot of entrepreneurs that
are selling these businesses because they wanna swing
at something bigger.
They wanna go after the 50 or 100
(20:24):
million dollar exit, business generating a couple hundred
thousand or a million dollars just isn't exciting
for them.
But they're being acquired by buyers where that
is exciting, where they're looking to have a
really nice, profitable lifestyle business and expand the
business to a couple million or something like
that.
And your probability of succeeding there are gonna
be a lot higher than if you're trying
(20:45):
to swing at 100 million dollar, potentially a
billion dollar opportunity.
So that's the smartest reason to acquire a
business is you aren't gonna have a 90
% chance of failure, you're gonna have probably
a higher probability of 90% of success.
So if you acquire, we've talked about what
you do to help us as small business
owners position ourselves to be able to exit
(21:07):
at maximum value.
What does acquire do to help on the
buying side?
Like are there services, there's support that you
do to provide help to somebody that might
be a first time buyer out there, first
time acquiring a company to help them overcome
those potential pitfalls to be able to have
a successful acquisition and to be able to
buy a company?
Yeah, we've built tools to essentially streamline and
(21:29):
automate the acquisition process for buyers.
So we'll generate an entire due diligence checklist
for recommendations on going through financials or customer
interviews or the product to just online research
of the business to make sure that you
check the boxes of things that you really
should look for before you acquire a business.
We also help generate a letter of intent,
(21:49):
asset purchase agreement, or flowing the transaction into
an escrow service so you can close safely
and securely.
We also just have a team available to
help along the way for buyers too.
But the big thing we help with both
sides where sellers are looking to find buyers
and buyers are looking to find sellers is
when you're a buyer on the platform, you
can set your preferences of what you're looking
(22:10):
to acquire.
And whenever a deal goes live that meets
those preferences, you'll instantly be notified.
So you aren't scouring the web or reaching
out to people on social media, asking if
they're trying to sell their business.
You get notifications consistently for relevant opportunities to
you.
You've mentioned a couple of times throughout this,
even including, you know, chat GPT and technology
and technology's part in this.
(22:30):
What do you see?
Like technology, AI trends, like what are you
seeing trending and changing in the M&A
world that we should really know about?
Definitely.
From my vantage point, we see tons of
AI companies.
Almost every software company we sell now has
an AI angle, whether it's AI first or
they have an AI component.
AI is absolutely here to stay.
(22:52):
And we're seeing a lot of that, which
is exciting.
We're seeing a lot of buyers really lean
into that as well.
And initially when we saw these quote unquote
chat GPT wrappers coming out onto the market,
no one wanted to buy them.
Everyone thought they were a phase, it was
a fad.
And now we're seeing the exact opposite where
buyers are really understanding this is here to
stay.
And we're seeing auctioneers build really interesting businesses
in the category.
(23:12):
And we're excited to see it keep going.
Yeah, and I'm interested in that.
Like from your perspective, what are people buying
right now?
Like what are some of the hottest trends
of business types?
And you mentioned AI.
Like what are the best type of businesses
right now that are selling?
Are they SaaS companies or something else?
Yeah, SaaS and AI and just general software.
(23:33):
But the one thing they mainly have in
common is they're all profitable.
In 2021, we saw a lot of businesses
that were unprofitable being acquired.
But since then we've seen profitability almost being
king in acquisition.
So it's the main driver for valuations, for
buyer interest.
We see that if businesses have an 80
% margin or above, pretty much all of
(23:54):
them will get some form of offer from
our buyer pool on acquire.
So if the business is, it has some
form of longevity, meaning it's been around for
ideally more than 24 months and it's profitable,
it's gonna get a lot of interest from
buyers.
Profitability just seems to be super important here.
Yeah, especially with the buyers that we work
with, 100%.
So acquire gets acquired.
(24:16):
You're starting over.
You wanna build a highly profitable business.
Years down the road, you can exit.
How would you do it?
What are you gonna do?
Like what are the things in the front
of your mind that pop into your head
to say, okay, here's probably the industry I
would start in.
Like here's some things I would be doing
right from the beginning to as quickly as
possible get this thing to where I could
exit for maximum value.
Definitely.
(24:36):
Honestly, I always joke and say, if it
wasn't for acquire, I'd be acquiring businesses on
acquire.
And I really mean that.
I think there's some great acquisition opportunities where
it's a SaaS company, the founder has some
form of product market fit, there's a few
marketing channels they haven't really explored.
I think those are great acquisition opportunities.
Again, the goal here wouldn't be to build
(24:57):
a really large $100 million empire, but I
think there's a lot of opportunities like that
that can lead to some really nice seven
figure outcomes.
And what do you think mistakes, just some
of the most common mistakes that you see
that really aren't that hard to avoid if
you just would have thought about them and
known about them beforehand?
In the acquisition process or when you're growing?
I think, let's look at it from, if
(25:19):
I'm trying to get acquired, what are the
mistakes I make where I just leave millions
on the table?
And then if I'm trying to acquire a
business, what are the dumb mistakes that people
make that mean where they're buying a bad
asset or paying too much?
Definitely.
I would say on the sell side, it's
overpricing.
If your asking price or your valuation is
too high, what you do is you scare
away all the buyers.
(25:40):
And when you scare away all the buyers,
you have no leverage.
Typically in those situations, I see two things
where the business doesn't sell or they get
one offer and it's usually offer lower than
their initial asking price or something like that.
What you want to do is the flip
side.
You want a price with a realistic asking
price or realistic valuation, because what that does
is that creates a lot of interest from
a lot of different buyers.
(26:00):
A lot of different buyers leads to multiple
offers.
Multiple offers leads to a lot of leverage,
which allows you to negotiate better terms or
higher valuation.
And then on the buy side, I would
say just sloppy due diligence or not just
wasting time is another big one, or just
not knowing what they're doing in due diligence.
So on sloppy due diligence would be just
missing key things, just understanding if this is
(26:21):
hundreds of thousands or millions of dollars.
Definitely invest in a third party review of
the business if you can afford it.
It's a good way to essentially protect any
downside risk.
And then just wasting time, meaning you submit
an LOI and you're not really serious about
acquiring the business, or you're just not sure.
That can hurt reputation and it's a fairly
well-known market.
(26:41):
So if you become known as a buyer
for wasting seller's time, it's going to make
it even harder to acquire a business down
the road.
Andrew, great stuff today.
If anybody's on here watching and saying, okay,
I want to learn more.
I want to learn more about acquiring a
company or selling my own, what steps should
they take?
Yeah, go to acquire.com and create an
account immediately and reach out to us as
(27:02):
a team and we'd be happy to help.
Andrew, thanks for coming on all this today.
Yeah, thanks for having me.
So look, if you're watching this, as I
said in the beginning, selling your business for
maximum value is really important because more than
likely your retirement, how you live the rest
of your life is based on this.
It's not something you want to screw up.
As a matter of fact, it's probably the
most important thing you could get right in
your business and we all get it wrong.
(27:22):
So make sure that you go to acquire
.com because when you go to acquire.com,
one of the first options you have is
are you a buyer or are you a
seller?
And so there's benefits both ways.
You can actually look and there's a lot
of really cool listings here for businesses you
may acquire.
You may all of a sudden realize you
can exponentially increase your revenues and profits by
acquiring another business.
Maybe it's a competitor.
Maybe it's another thing that you're doing that
(27:43):
you're outsourcing internal that you could bring into
a lot of different options.
But you want to check out acquire.com
because there's a lot of opportunities for you
to buy businesses that could exponentially increase your
revenues and profits.
And then on the other side, it's phenomenal
for sellers because there's all kinds of information
that you're able to get at acquire.com
and with the team to be able to
learn more about selling your business at maximum
(28:04):
value to not leave seven and eight figures
on the table like so many people do.
So make sure you go to acquire.com.
Everything you need is there to either sell
your business and be able to get it
acquired or to be able to buy another
business.
Either way, it's going to potentially put millions
of dollars in your pocket, whether it be
increasing profits by acquiring or getting acquired down
(28:26):
the road and doing it the right way.
So make sure you check it out at
acquire.com.
Thanks for tuning in.
Take care.
Have a great day.
You've been listening to the Business Credit and
Financing Show with your host, Ty Crandall.
(28:47):
Watch for our next episode to get even
more insight on financing and growing your business.
And don't forget to check us out online
at creditsuite.com for even more business growth
strategies.
(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to the Business Credit and Financing Show.
Each week, we talk about the growth strategies
that matter most to entrepreneurs.
Listen in as we discuss the secrets to
getting credit and money to start and grow
your business.
And enjoy as we talk with seasoned business
owners, coaches, and industry leaders on a variety
(00:22):
of topics from advertising and marketing to the
nuts and bolts of running a highly successful
business.
And now, to introduce the host of our
show, financial expert and award-winning author, Ty
Crandall.
Hello, and thanks for joining us today.
I'm super excited you could be here because
today we're talking about exiting your business at
the maximum value.
(00:43):
Look, everybody messes this up.
And the problem is, as an entrepreneur, you
probably bank your retirement on what you're going
to get out of your business when you
exit.
But I can tell you that of every
friend I've ever had that's exited their business,
all of them wish they knew what we're
gonna be talking about today while they were
building the business.
For them, they've got multiple maximum values.
(01:03):
Matter of fact, a lot of them left
millions, if not tens of millions, on the
table because they didn't know how to exit
properly.
And so what we're gonna talk about today
is we're gonna talk about how to prepare
for a successful acquisition of your company.
And there's a lot of things that I
think you're gonna learn about this of both
acquiring another company and getting acquired yourself.
So a lot of different things that we're
gonna be able to go over.
So with us today is Andrew Gazdecky.
(01:25):
Now, Andrew is a seasoned entrepreneur, four-times
founder and the CEO of Acquire.com, a
platform transforming the startup acquisition process.
Now, with a passion for building businesses, he
has successfully founded and exited multiple different companies,
including Business Apps, which he scaled to 10
million ARR before his acquisition, and Outcoin.io.
(01:49):
Through Acquire.com, Andrew has helped hundreds of
startups get acquired and facilitated over $500 million
in closed deals.
His mission is to make M&A more
accessible for bootstrapped founders and small startups, giving
them the tools and resources to achieve successful
access.
Now, he's a recognized thought leader in entrepreneurship,
(02:10):
in SaaS and startup acquisition.
Andrew's insights have been featured in major publications,
including the New York Times, Forbes Magazine, the
Wall Street Journal, TechCrunch.com, and Entrepreneur Magazine
as well.
With a social media reach of over 350
,000 people, he actively shares expertise and lessons
learned from his journey to help the next
(02:32):
generation of founders.
When he's not simplifying acquisitions, Andrew enjoys cars,
skateboarding, and surfing.
What's up, Andrew?
Thanks for coming on the show with us
today.
Yeah, thanks for having me on, Ty.
I appreciate the intro, that was awesome.
Well, based on all this, you have like
the coolest life ever, if that's what it
sounds like.
I could have just summed it all up
to say he has the coolest life ever
and it would have worked.
Yeah, I appreciate that, thanks.
(02:54):
So let me ask you, when you're talking
about getting acquired in small businesses, what do
you find that some of the biggest things
that founders overlook that they should be doing
from the beginning to be able to exit
at multiple value?
Definitely, I would say right at the top
is just understanding what a sellable business looks
like.
So just basic things.
(03:14):
I think a lot of entrepreneurs also overcomplicate
it.
So can the business run without you in
the business day-to-day?
I think that's a big, big, big one
that a lot of entrepreneurs and founders just
overlook.
A lot of buyers aren't gonna wanna buy
a business where when you step away for
a day or a couple hours, everything catches
on fire.
And then also looking at, do you have
processes documented?
Do you have SOPs?
(03:35):
Do you have basic things like a training
manual?
One tip here could be to just go
through your day-to-day with every department
and just start documenting things.
This can be used for onboarding new employees.
This could be used to strengthening your existing
team and your existing processes.
But just having some sort of operational manual
to let others know how this business run
is huge.
(03:55):
And then when you start meeting with buyers,
sharing that is gonna make things a lot
easier.
So again, things like making sure that the
business isn't heavily relying on you, having SOPs
and processes documented, having good metrics as well.
So I typically work with software companies.
So we look at things like, how durable
is the revenue?
Is there really high churn or cancellations?
(04:17):
Which essentially just means, do you have a
good product?
Or do you have a way to repeatedly
attract new customers into the business?
Is there some form of scale to the
business?
Or is it kind of a just getting
off the ground type business?
And then just packaging all this together properly,
outlining the types of buyers that would be
interested in potentially acquiring your business.
(04:37):
Being able to articulate all of this to
them.
Those are some things that are top of
mind.
We can get more into the details, but
those are usually the biggest chunks.
So I find that a lot of founders
have this tendency, like when we start a
business, we have no money and a lot
of time.
So founders basically take on every role, right
from the beginning, right?
Then I find that a lot of founders
are so obsessed with their ability to do
(04:59):
those things that they have a hard time
handing them over to other people.
Is this something that you see is pretty
common with founders and how do they get
out of that trap to start to delegate
so they're not in the business, they're actually
working on the business?
100%, it's one of the hardest transitions for
any entrepreneur when you're building a business is
you just have to let go.
You have to hire people that are typically
(05:20):
smarter than you or specialize in the roles
that you're consistently doing day in, day out.
And just like a piece of advice for
that would be, let's say it's like a
sales role.
Like you were the lead salesperson.
At some point, you're gonna need to hire
a salesperson and to do that, you're gonna
need to train them to make sure they
understand your customer, the pitch.
How do you run these sales calls?
So starting right there, you can start writing
(05:42):
down what does the script look like?
What are common questions that prospects ask you
on these calls?
What are your common flow style for the
call?
And that right there is an SOP, just
document your sales process.
Now you can hire someone, train them with
it.
So you can do that across every department.
But yeah, generally, it's one of the hardest
things to do for entrepreneurs.
I struggle with it myself.
(06:03):
So that right there can increase the value
of your business immediately.
Is there a good way to track SOPs?
Do you have technology or advice for founders?
Because I think a lot of founders don't
do this.
They're not tracking every position in that company
and the role of what that position does.
What's the best way, if they haven't done
that so far, to get started doing that
(06:24):
for them and their team?
I think step one is just open up
a Google Doc.
It doesn't have to be super fancy.
Whatever works for you.
If you use Notion Doc or another type
of note-taking app, just start writing down
what the processes are for that department.
So another example would be marketing.
How do you attract customers into the business?
Is it organic search?
Is it paid ads?
If it is paid ads, what is the
(06:46):
week-to-week or day-to-day management
for the paid ad accounts?
Are you constantly looking at different types of
key terms?
You have to manage different budgets.
If it's social media, how often do you
post?
How do you make the content?
And then right there, you have a simple
SOP for your marketing strategy and how you're
attracting new leads or new customers into the
business.
And then you can hire someone, train them
(07:06):
with that document.
And it can get obviously way more detailed
than that, but just that basic sort of
how does sales run?
How does marketing run?
It's huge.
And all you really need to do to
get started is just think about what does
that look like on a week-to-week
basis?
And just write it down in Google Drive
and just keep it there.
So I think valuation is something that a
lot of us are just confused about.
(07:26):
Maybe because there's so many different ways to
value a business.
But what should we be thinking?
What do you teach your founders that we
should be thinking about as we're building the
business of things that are very important that
will have to do a lot with the
exit value?
We talked about SOPs, obviously, right?
And we talked about not working in the
business, but what are some things we should
be paying attention to?
(07:47):
Like, are we paying attention to, like you
said, like a cohort analysis?
Are we looking at how long we're retaining
that customer?
Or what are some of the main things
that founders just overlook oftentimes that are really
important for them getting maximum value in the
exit?
Definitely.
I think having bad business models can really
destroy a valuation.
Like if it has a business model where
(08:08):
it's just all one-time fees or something
like that, and it's a SaaS product.
And the reason for that is the new
buyer is gonna have to manage all of
these customer relationships and they're not generating any
additional revenue from doing so.
So you're gonna get a heavy discount from
all these one-time fees that you may
have incurred during the life of the business.
So that's a big one.
Another one would be having too much customer
(08:29):
concentration.
So what that can mean is you have
one really large customer that takes up 20
to 30 or even more than that, 50
% of your revenue.
And what that tells a buyer is that
the revenue is just, it's risky, where if
they buy the business that customer leaves, the
valuation can drop by up to 50%
or more.
So those are two ones, just thinking about
building the business in a way where you're
(08:51):
generating revenue every single month from your customers
and then not being so reliant on one
really, really large customers.
Those can be deal coders in my experience.
What about financing?
What do you talk to founders about along
the way of building a business?
And I think about this because when I
look at Harvard graduates, like one of the
benefits they have is the people they meet
while they're in school.
And then a lot of them are launching
(09:12):
endeavors and right out the gate, they're going
out to raise capital, right?
Somebody like me, like I never learned any
of that.
I mean, I bootstrapped it from the ground
up.
And I have a large part of our
audiences that same way where I think they're
used to bootstrapping, not used to VC or
angel.
So what do you say about that?
When you're helping founders kind of build up,
do you advise them that they borrow money
(09:33):
or access capital to do it?
Do you advise that they access debt?
Do you advise that they access equity financing?
Like what are those conversations like?
What helps a startup get the money they
need to actually get to a point where
they can be acquired?
Definitely.
I think the first thing to do there
is to understand what you're trying to build.
I think a lot of entrepreneurs go out
to raise capital and they're not essentially trying
(09:54):
to build a multi-billion dollar business.
It's a business that could be worth 10
or 20 or 30 or 40 or $50
million, which is a huge business.
That is a massive windfall for an entrepreneur.
But once you take on venture capital for
a business like that, it kind of breaks
all of that down because you're going to
have to be pushing the business in ways
that may not be a smart thing to
(10:15):
do to get to the larger outcomes.
Think of it as like boom or bust.
So that's the first thing.
What kind of business are you building?
Is this a true multi-billion dollar opportunity?
Do you really want to build a business
like that?
And then if so, why is a good
question as well.
Because when you go to sell your business
as well, if you've raised a lot of
venture capital, you're going to have to typically
pay back your investors at a one-time
(10:35):
liquidation preference.
Which essentially means if you raise $5 million,
then when you go to sell the business,
investors are paid back first, which is going
to take from your final exit amount.
But again, it just depends on the entrepreneur.
I would recommend bootstrapping.
I think you generally will build better businesses.
That way you really are forced to speak
with customers, get really close to them, because
(10:56):
they're the ones paying the bills.
But again, I think it's a very personal
question and it is really going to be
based on personal ambition and market opportunity, in
my opinion.
I appreciate that.
Andrew, another thing I see a lot of
our tribe struggles with is that they're so
affixed on top-end revenue, what they're selling,
not what they're collecting or margin, right?
And I see a lot of entrepreneurs make
this mistake.
(11:17):
They even boast, they brag about it, right?
So what's your advice about cashflow management or
really focusing on margin?
And how important truly is it?
Because we hear that EBIT is so important
and profit margin is so important, but give
me a rundown of that, of looking at
the profit margins and the net versus necessarily
the gross.
Totally.
(11:37):
I think it depends on how fast your
business is growing.
So what I typically see is, related to
valuation specifically, we see two types of multiples.
We see revenue multiples and we see EBITDA
multiples or net profit multiples.
We'll see revenue multiples if the business is
growing really fast, so 100% year over
year.
There isn't a lot of profits in the
(11:58):
business because they're investing everything to grow faster.
Those are rare outcomes.
That's where, again, the business is expanding very
quickly and the most logical multiple to give
the business is a revenue multiple.
More commonly would be a profit multiple where
the business has slower growth, sometimes stagnant or
declining, and those businesses, it's really important.
(12:19):
If it's slow growth and there's not a
lot of profit, then that business essentially isn't
sellable.
So if you're not focused on building a
profitable business and it's not necessarily growing very
fast, it may not be worth anything to
buyers.
So if you're in a situation like that
where it's not growing and it's not profitable,
you need to make the business profitable if
you wanna exit it, in my experience.
(12:39):
And how do we figure out what multiple
we may have?
Because I think a lot of our tribe,
too, struggles to know what industry they're actually
in.
And I mean, it sounds crazy, right?
They might say I'm in real estate, but
if you're really looking at NIAC, so there's
like 30 subcategories of real estate you could
be in, for example.
So how do they figure out, can they
even make the determination?
You look at Credit Suite, we are a
(13:01):
software company on paper, but we also are
an education company because we do education, we
do business credit financing.
So how do we figure out what multiple
we may have in the industry that gives
us the highest multiple?
Yeah, you can look at comparables, so like
similar businesses that have sold that could be
competitors or in a simple market segment that
you're in.
But generally there are rules of thumb, like
(13:22):
SaaS businesses will sell for anywhere from three
to 10 times net profit.
So you typically will have some sort of
range.
This is also simplification, but if you go
on like ChatGBT and just ask, like, hey,
what are the multiples for my business?
Can you find five examples of similar businesses
that have sold with multiples?
That'll give you a range as well.
(13:43):
Because valuation is also part art, part science.
So you don't want to just say, this
is exactly what the business is worth.
You just want to have kind of a
ballpark figure.
Well, what do you see happens with somebody
exits in due diligence?
Like what kind of due diligence thing come
up where somebody's trying to exit and they're
like, oh man.
And they get caught in something to do
with due diligence that's common that they didn't
(14:04):
think about that lowers the value.
Because they hear this all the time, right?
Somebody comes in and says, your business is
worth $10 million.
But then when they get in and start
doing the due diligence, then all of a
sudden they find this, don't like this, don't
like this, and it reduces that.
So like, what can we be focusing on
that we don't get to that final stage
of selling our business and go, oh man,
I didn't know that stuff would really hurt
me as much as it did during that
(14:24):
due diligence period.
Yeah, definitely.
I think the big one there, which is
also kind of an obvious thing, is just
surprises.
If you're going into due diligence with a
buyer.
And now a quick break to hear from
our sponsor.
Hey, it's Ty Crandall with Credit Suite.
Many of our subscribers want to get the
most money to grow their business at the
best terms.
Whether you're looking for startup capital, low interest
(14:46):
credit lines and loans, or business credit, we
can definitely help you.
So give us a call at 877-600
-2487 or schedule your free consultation at creditsuite
.com forward slash consult to see how much
money you can get approved for today.
Just assume they're going to find out everything,
both good and bad.
And so you want to get in front
of any bruises or bad parts of your
(15:07):
business or things that may just appear not
good.
That could be a customer's canceling.
It could be bugs in your product.
It could be an issue with a former
teammate.
Whatever it may be, just be upfront about
that with the buyer rather than the buyer
finding it on their own.
It's a big surprise.
And now the buyer's thinking, what else could
be wrong with this business?
(15:28):
What else am I going to find out?
And that can completely derail an acquisition.
So just any sort of surprises or anything
that maybe could be improved on the business,
just be upfront about it.
Acquire, acquire.com.
First of all, what the heck?
How'd you get the name?
How'd you get the domain acquire.com?
I got, I had just out of curiosity.
I got to know that.
Yeah, yeah.
The short story there is I actually reached
out to the owner like four years ago.
(15:49):
I got the domain about a year and
a half, two years ago.
He wanted 900,000 for the domain.
I obviously said that was too high and
then ended up buying it for 200,000.
Well, that's pretty cool.
So just diligence.
Yeah, he just reached out and said he's
looking to sell it.
I said, this is the most I could
possibly pay and transacted, actually when I was
on vacation with my family.
So were you already acquire before then?
(16:12):
You just didn't know an acquire.com?
No, we were called micro acquire.
And so we dropped the micro and now
we're just acquire.com.
That's pretty cool.
So how can, and how does acquire help
a small business owner better position themselves for,
to be acquired?
Definitely, we've created a platform where we give
you access to essentially more buyers than you
(16:33):
could possibly ever reach on your own or
with another M&A advisory firm.
We also walk you through the acquisition process
step-by-step with hands-on support.
So from valuation to preparation to buyer outreach
to creating the initial listing or SIM creation
or financial recasting, we're with you every single
step of the way to make sure that
you truly maximize your acquisition.
(16:54):
So is this, how do you compare this
to an investment banker going through a firm
that helps me actually potentially sell my business?
We like to think of ourselves as a
tech-enabled investment bank where we leverage data
to access the most specific buyers that are
interested in acquiring a business like yours.
For example, we have over half a million
buyers registered on our platform and we collect
(17:15):
information on everything that they're looking to acquire.
So if you are a SaaS business with
more than a million in revenue in the
MarTech space, we can specifically outline buyers that
are actively looking for acquisition targets like yours.
So we essentially are more efficient at selling
businesses than other options.
So if we flip it a little and
let's say that a lot of insight about
(17:36):
selling our business, what if I want to
acquire?
Like what's some of your best advice if
I'm a business owner, I own a business
here, I own Credit Suite, and I see
another business I want to acquire.
So in that case, like what's some of
your best advice for me to be able
to acquire another business?
Definitely.
I think due diligence is gonna be huge.
Definitely if you haven't gone through a process
(17:56):
like this, you can hire third-party firm.
We have referrals for this where you can
do something called a quality of earnings check
where you can review all the financial information
to essentially verify that it is accurate and
isn't less or more than maybe what the
seller is representing.
But also getting an understanding of what are
you truly looking to acquire and why.
(18:16):
We have hundreds of businesses listed on the
Acquire platform that range from $50,000 all
the way up to tens of millions of
dollars.
So are you looking to expand into a
new market?
Are you looking to expand your products or
services?
Are you looking to potentially acquire a business
rather than starting a business?
Outlining that to narrow down your search I
think is key.
(18:37):
So how do I get financing for this?
And I think that's one of the biggest
questions maybe you get, I definitely hear it
too on the acquisition side.
What are some of the best options you've
found for a small business or for somebody
that's looking to acquire a business to get
the financing you need to do so?
Definitely.
From my experience, there's really two routes.
There's typical SBA bank financing.
That's for acquisitions up to $5 million.
(19:01):
You can go larger than that, but the
loan size is up to 5 million.
Those are gonna be typically harder to get
and you're gonna need to give a personal
guarantee with your bank.
So if you're interested in that, you can
go to your local bank or whoever your
business bank's with and you can ask about
their SBA loan process.
We also have referrals for that as well.
There's some strict requirements to get those types
(19:21):
of loans.
Specific types of businesses, they need to meet
a certain level of profitability.
They aren't for unprofitable businesses.
So that's the main use case for SBA
loans.
Then the second option is gonna be to
get financing from investors.
So that'd be where you locate a type
of acquisition that you wanna close and you
(19:42):
leverage either investors that you know or the
existing investors in your business.
What are the biggest rewards of doing this
versus building?
And I read a great book, I don't
know if you ever read it, called I
think Buy Versus Build.
And so from your perspective, what are some
of the best benefits and drawbacks, the pluses
and minus of acquiring a business versus building
it from scratch?
(20:02):
Definitely.
I think for the software industry or the
startup industry specifically, you're able to essentially skip
over the hardest part of building a startup,
which is where you're finding product market fit.
You're scraping and clawing to get a handful
of customers, figure out the pricing model, what
features are actually important.
We work with a lot of entrepreneurs that
are selling these businesses because they wanna swing
at something bigger.
They wanna go after the 50 or 100
(20:24):
million dollar exit, business generating a couple hundred
thousand or a million dollars just isn't exciting
for them.
But they're being acquired by buyers where that
is exciting, where they're looking to have a
really nice, profitable lifestyle business and expand the
business to a couple million or something like
that.
And your probability of succeeding there are gonna
be a lot higher than if you're trying
(20:45):
to swing at 100 million dollar, potentially a
billion dollar opportunity.
So that's the smartest reason to acquire a
business is you aren't gonna have a 90
% chance of failure, you're gonna have probably
a higher probability of 90% of success.
So if you acquire, we've talked about what
you do to help us as small business
owners position ourselves to be able to exit
(21:07):
at maximum value.
What does acquire do to help on the
buying side?
Like are there services, there's support that you
do to provide help to somebody that might
be a first time buyer out there, first
time acquiring a company to help them overcome
those potential pitfalls to be able to have
a successful acquisition and to be able to
buy a company?
Yeah, we've built tools to essentially streamline and
(21:29):
automate the acquisition process for buyers.
So we'll generate an entire due diligence checklist
for recommendations on going through financials or customer
interviews or the product to just online research
of the business to make sure that you
check the boxes of things that you really
should look for before you acquire a business.
We also help generate a letter of intent,
(21:49):
asset purchase agreement, or flowing the transaction into
an escrow service so you can close safely
and securely.
We also just have a team available to
help along the way for buyers too.
But the big thing we help with both
sides where sellers are looking to find buyers
and buyers are looking to find sellers is
when you're a buyer on the platform, you
can set your preferences of what you're looking
(22:10):
to acquire.
And whenever a deal goes live that meets
those preferences, you'll instantly be notified.
So you aren't scouring the web or reaching
out to people on social media, asking if
they're trying to sell their business.
You get notifications consistently for relevant opportunities to
you.
You've mentioned a couple of times throughout this,
even including, you know, chat GPT and technology
and technology's part in this.
(22:30):
What do you see?
Like technology, AI trends, like what are you
seeing trending and changing in the M&A
world that we should really know about?
Definitely.
From my vantage point, we see tons of
AI companies.
Almost every software company we sell now has
an AI angle, whether it's AI first or
they have an AI component.
AI is absolutely here to stay.
(22:52):
And we're seeing a lot of that, which
is exciting.
We're seeing a lot of buyers really lean
into that as well.
And initially when we saw these quote unquote
chat GPT wrappers coming out onto the market,
no one wanted to buy them.
Everyone thought they were a phase, it was
a fad.
And now we're seeing the exact opposite where
buyers are really understanding this is here to
stay.
And we're seeing auctioneers build really interesting businesses
in the category.
(23:12):
And we're excited to see it keep going.
Yeah, and I'm interested in that.
Like from your perspective, what are people buying
right now?
Like what are some of the hottest trends
of business types?
And you mentioned AI.
Like what are the best type of businesses
right now that are selling?
Are they SaaS companies or something else?
Yeah, SaaS and AI and just general software.
(23:33):
But the one thing they mainly have in
common is they're all profitable.
In 2021, we saw a lot of businesses
that were unprofitable being acquired.
But since then we've seen profitability almost being
king in acquisition.
So it's the main driver for valuations, for
buyer interest.
We see that if businesses have an 80
% margin or above, pretty much all of
(23:54):
them will get some form of offer from
our buyer pool on acquire.
So if the business is, it has some
form of longevity, meaning it's been around for
ideally more than 24 months and it's profitable,
it's gonna get a lot of interest from
buyers.
Profitability just seems to be super important here.
Yeah, especially with the buyers that we work
with, 100%.
So acquire gets acquired.
(24:16):
You're starting over.
You wanna build a highly profitable business.
Years down the road, you can exit.
How would you do it?
What are you gonna do?
Like what are the things in the front
of your mind that pop into your head
to say, okay, here's probably the industry I
would start in.
Like here's some things I would be doing
right from the beginning to as quickly as
possible get this thing to where I could
exit for maximum value.
Definitely.
(24:36):
Honestly, I always joke and say, if it
wasn't for acquire, I'd be acquiring businesses on
acquire.
And I really mean that.
I think there's some great acquisition opportunities where
it's a SaaS company, the founder has some
form of product market fit, there's a few
marketing channels they haven't really explored.
I think those are great acquisition opportunities.
Again, the goal here wouldn't be to build
(24:57):
a really large $100 million empire, but I
think there's a lot of opportunities like that
that can lead to some really nice seven
figure outcomes.
And what do you think mistakes, just some
of the most common mistakes that you see
that really aren't that hard to avoid if
you just would have thought about them and
known about them beforehand?
In the acquisition process or when you're growing?
I think, let's look at it from, if
(25:19):
I'm trying to get acquired, what are the
mistakes I make where I just leave millions
on the table?
And then if I'm trying to acquire a
business, what are the dumb mistakes that people
make that mean where they're buying a bad
asset or paying too much?
Definitely.
I would say on the sell side, it's
overpricing.
If your asking price or your valuation is
too high, what you do is you scare
away all the buyers.
(25:40):
And when you scare away all the buyers,
you have no leverage.
Typically in those situations, I see two things
where the business doesn't sell or they get
one offer and it's usually offer lower than
their initial asking price or something like that.
What you want to do is the flip
side.
You want a price with a realistic asking
price or realistic valuation, because what that does
is that creates a lot of interest from
a lot of different buyers.
(26:00):
A lot of different buyers leads to multiple
offers.
Multiple offers leads to a lot of leverage,
which allows you to negotiate better terms or
higher valuation.
And then on the buy side, I would
say just sloppy due diligence or not just
wasting time is another big one, or just
not knowing what they're doing in due diligence.
So on sloppy due diligence would be just
missing key things, just understanding if this is
(26:21):
hundreds of thousands or millions of dollars.
Definitely invest in a third party review of
the business if you can afford it.
It's a good way to essentially protect any
downside risk.
And then just wasting time, meaning you submit
an LOI and you're not really serious about
acquiring the business, or you're just not sure.
That can hurt reputation and it's a fairly
well-known market.
(26:41):
So if you become known as a buyer
for wasting seller's time, it's going to make
it even harder to acquire a business down
the road.
Andrew, great stuff today.
If anybody's on here watching and saying, okay,
I want to learn more.
I want to learn more about acquiring a
company or selling my own, what steps should
they take?
Yeah, go to acquire.com and create an
account immediately and reach out to us as
(27:02):
a team and we'd be happy to help.
Andrew, thanks for coming on all this today.
Yeah, thanks for having me.
So look, if you're watching this, as I
said in the beginning, selling your business for
maximum value is really important because more than
likely your retirement, how you live the rest
of your life is based on this.
It's not something you want to screw up.
As a matter of fact, it's probably the
most important thing you could get right in
your business and we all get it wrong.
(27:22):
So make sure that you go to acquire
.com because when you go to acquire.com,
one of the first options you have is
are you a buyer or are you a
seller?
And so there's benefits both ways.
You can actually look and there's a lot
of really cool listings here for businesses you
may acquire.
You may all of a sudden realize you
can exponentially increase your revenues and profits by
acquiring another business.
Maybe it's a competitor.
Maybe it's another thing that you're doing that
(27:43):
you're outsourcing internal that you could bring into
a lot of different options.
But you want to check out acquire.com
because there's a lot of opportunities for you
to buy businesses that could exponentially increase your
revenues and profits.
And then on the other side, it's phenomenal
for sellers because there's all kinds of information
that you're able to get at acquire.com
and with the team to be able to
learn more about selling your business at maximum
(28:04):
value to not leave seven and eight figures
on the table like so many people do.
So make sure you go to acquire.com.
Everything you need is there to either sell
your business and be able to get it
acquired or to be able to buy another
business.
Either way, it's going to potentially put millions
of dollars in your pocket, whether it be
increasing profits by acquiring or getting acquired down
(28:26):
the road and doing it the right way.
So make sure you check it out at
acquire.com.
Thanks for tuning in.
Take care.
Have a great day.
You've been listening to the Business Credit and
Financing Show with your host, Ty Crandall.
(28:47):
Watch for our next episode to get even
more insight on financing and growing your business.
And don't forget to check us out online
at creditsuite.com for even more business growth
strategies.
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