As the field of Entrepreneurship Through Acquisition (ETA) grows and more people in the community speak out about their experience, it becomes clear that you’re more likely to succeed when you match your skills with the right business opportunities. Looking for a business that aligns with your interests and experience is the best way to stand out and catch the right seller’s attention. It also means that your transition to leading your new business is likely to be smoother. In this article, we’ll explore how to make the most of your unique assets as a buyer: linking your know-how with the right small business isn’t just a strategic move; it’s a big step towards taking charge of your career.
A Simple Three-Step Process for Alignment: Interests, Skill Sets, and Opportunities
- Identify Your Interests: The first step involves connecting personal interests with relevant business sectors. Acquiring a business is a difficult and complex process that requires genuine enthusiasm. Knowing what excites you can give you the driving force that leads to success.
- Make an Inventory of Your Skills: Next, you’ll take your inventory of personal interests and align them with your skills. This will help you find the intersection of passion and practical abilities. The business types that emerge are a good foundation for the start of your search.
- Align with Existing Opportunities: With your target business types in hand, it’s time to search. Use tools like Private Market Labs to identify opportunities that align with your targets, no matter how narrowly constructed those targets may be. When you find a deal that looks interesting, make sure to emphasize your fit with the company to stand out from the pack.
Why Alignment Matters So Much Pre-Acquisition
While our community is resilient and smart, with a strong ability to learn any job or industry, acquiring a business is at least partly a messaging game. With more searchers entering the industry on a regular basis, your ability to stand out is becoming more important. The most effective way to get noticed by sellers, brokers, and key stakeholders is to have a convincing “why me” argument that aligns your skills, interests, and experience with your target company. This will help you generate the necessary narrative to convince them that you are the best choice.
Broker and Capital Provider Expectations
The most experienced brokers and capital providers, in their roles as decision-makers, have seen thousands of offers come their way across many acquisitions. Demonstrating a strong alignment between the buyer’s expertise and the industry of the target company can be the standout factor that gets one noticed. Such alignment indicates a buyer who is not only serious but also possesses potential for business success. In their minds, an aligned buyer can:
- Demonstrate strong fit to the seller, helping move the deal to close
- Ensure smoother negotiations given a shared base of knowledge
- Display the motivation and intensity to get the deal over the finish line when things get tough
Lender Underwriting – The Buyer-Company Fit
Financing is often a foundation of acquisitions, and lenders tend to favor offers that exhibit minimal risk. Stronger alignment boosts lenders’ confidence in the proposal, potentially leading to quicker approvals. When lenders underwrite a loan for a small business acquisition, they take a close look at how well the buyer and the business match up. Lenders want to see:
- Evidence of the buyer’s understanding of the industry.
- Proof that the buyer can effectively manage and grow the business post-acquisition.
Your Personal Story Is Your Best Tool
Every entrepreneur has a story that captures their journey, vision, and reasons for pursuing a specific business. This narrative becomes the centerpiece when communicating with brokers, sellers, and lenders. Crafting a story that highlights your fit, expertise, and vision for the business can be a powerful tool. A well-framed narrative can:
- Persuade brokers of your genuine interest and capability.
- Convince sellers that their legacy will be in good hands.
- Provide lenders with additional assurance of the business’s future success under your leadership.
Why Alignment Matters Post-Acquisition
Matching your skills with a business purchase might mean the difference between merely surviving and truly thriving in the business world. There are several strong reasons worth considering in the later stages of your journey:
- Efficiency in Operations: Matching your skills with a business buying ensures a reduced learning curve, allowing for immediate focus on growth. With knowledge of industry best practices, operational decisions become more impactful, enabling quicker problem-solving and encouraging innovation.
- Workforce Dynamics: When a company is led by someone familiar with the industry, employee morale and trust typically improve. This not only reduces staff turnover but also fosters a more collaborative environment.
- Visionary Leadership: Familiarity with the sector can shape a strategic vision for the company’s future, setting accurate goals and preparing it for market shifts. Owners with industry knowledge can anticipate risks and build trust more effectively, ensuring informed decisions during both the acquisition and operational stages.
- Personal Satisfaction and Resilience: Furthermore, aligning one’s passion and expertise with business acquisition can lead to greater personal satisfaction. When challenges arise (as they inevitably do in business), this internal/external match can serve as a source of resilience and motivation to persevere.
Identifying and Bridging Expertise Gaps
Success in Entrepreneurship Through Acquisition (ETA) involves not only recognizing one’s strengths but also admitting and addressing knowledge gaps. By seeking advice or collaborating with experts, you can assemble a comprehensive team that helps you overcome weaknesses in your resume. Such a diversified team not only bridges these gaps but also bolsters stakeholder confidence.
On a recent episode of our podcast, we spotlighted an entrepreneur, Kaustubh, who was able to effectively bridge the knowledge gap in his acquisition of Blooma Tree Experts, despite not having experience as an arborist. His systematic approach showcases the benefits of building strong teams. Kaustubh collaborated closely with the seller and leaned on the experience of tenured employees, carving out a unique position for himself through a distinct perspective on his chosen industry. He is just one of the many success stories where perseverance and desire to learn were enough to overcome misalignment.
Conclusion and Further Resources
In the world of small business acquisitions, your ability to express and sell a compelling vision to brokers and sellers is crucial. The more you can demonstrate a seamless alignment between your experience, vision, and the future business, the smoother the acquisition journey will be.
Entrepreneurship Through Acquisition (ETA) has evolved into a distinct field of its own. One of the best ways to bridge the information gap and stay updated is to engage with the community and immerse yourself in key resources.
Books/Publications considered classics in the field:
- The Stanford Guide
- The Harvard Business School Guide
- Buy Then Build
- The Messy Marketplace
- Yale Case Studies
Newsletters and Blogs:
The digital space is brimming with helpful ETA insights. While there are numerous resources out there, a few that have caught our attention for their authentic, first-hand insights include:
For those just embarking on this journey, our guide titled 42 Steps to Buying a Small Business serves as a detailed starting point. It provides a structured blueprint for the acquisition process, indirectly emphasizing the fundamental role of alignment.