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Small biz acquisition?

Started by ptkelly, September 25, 2018, 06:52:57 AM

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Has anyone out there purchased a small business to own & operate?

Currently have the liquidity and with SBA leverage could afford a $5m metal-bender type business.

Thoughts and experiences?


As a side hustle, I am considering a number of possibilities, and purchasing a small business is one of them. I'll be curious to see if anyone chimes in. Sorry I can't offer any guidance; I'm looking for the same information as you!


The best small businesses to buy IMO are websites that generate regular revenue already. You can buy these business for 2-3X annual revenue only, or maybe 5X operating profits. Compare that to the S&P 500 trading at a CAPE PE of 33X!




Look up search funds and "Entrepreneurship Through Acquisition". There are a lot of good resources out there, including studies by Stanford Professors and a book by two HBS professors.

Definitely an interesting path. Certainly higher risk than buying real estate.


A website is a tough one.  I personally wouldn't pay anywhere near 5X profits.  I'd pay 1X - 2X, MAX.  Google changes an algorithm and you could be wiped out.  I can think of all sorts of websites that have come and gone.  5+ years to break even at the rapid change of pace that comes with the internet... That's a tough sell!

I would check small business brokerage sites... bizbuysell for example.  Look through and just spend a LOT of time looking through.... See what is available, what they are selling for, what their profits are, etc.  Business is tough and if you are expecting a turn key operation that will be smooth sailing, you may be in for a huge surprise.  Consider that a good portion of businesses for sale are because the owner can't handle it any more, they feel a downturn, too much competition, etc.  It's tough.

The most turnkey would be something like a gas station/convenience store.  Beyond that, there are so many opportunities to just start something yourself.  Start small.  Sell, sell, sell.