Allison Maslan discusses why buying existing businesses beats building from scratch. Look for profitable targets with diverse customers, avoid distressed companies, and watch for key-person risk where one founder leaving could tank the business.
Chapters
building businesses from scratch is kind of like being dragged through asphalt and glass versus acquisitions can solve almost any business challenge. And therefore, I decided that I'm leaning into it.
What are you looking for when you're looking to acquire a business? What are those main bullet points that are have-tos?
First of all, I have to have a business thesis. What am I looking for in an acquisition? Why am I buying it? Is it as a platform or is it incremental to my business? Is it a Another service I want to offer, because if I start a new service, I have to invest in people and take risks that'll be successful versus I can buy a business. And if I'm buying a profitable business, there is hundreds of ways to finance acquiring a profitable business. When it really comes down to it, I look for, does it fit my buying criteria? How confident am I about the future of this business? Are all the customers concentrated so it's 70% of their revenue? Is there one person in the company, could be the owner, that is reliant on that if they leave, the business goes to zero? Look for things that put the business at risk. For me personally, I'm 99% sure I will not buy a business that is in trouble again. I didn't say 100%, I'm 99%.
And then the diversification, right? So they don't have all their eggs in one basket as far as their clients, customers, and also their team.
