In this monologue, the speaker explains why acquiring a small business has become increasingly difficult. He points to three major forces: (1) a surge in adult children joining their parents’ firms, which reduces the pool of owners willing to sell; (2) heightened competition from private‑equity firms and a growing number of search‑fund entrepreneurs; and (3) a cultural shift that now embraces nepotism, making family succession more common. He backs these claims with recent data showing a doubling of adult‑kid employees since 2018 and a 13 % rise last year in businesses that have a same‑surname employee. After outlining the problem, he offers a practical counter‑strategy: pick a narrow niche, become a recognized expert, and hustle relentlessly to build credibility with sellers. He illustrates this with his own rapid acquisition of a software company after six months of intensive learning. The speaker concludes that while the market will keep tightening, buyers who specialize, network aggressively, and persist can still close deals.
Chapters
So why does it seem like it's so hard to find a business to buy? If you're somebody that's like trying to get an entrepreneurship through acquisition, it seems like it's getting harder and harder every year. And there's some stuff we're all aware of, like private equity coming in, different types of, you know, the popularity of search funds, all these people that are hunting and trying to buy businesses and big companies hoovering them up to try to grow because they can't, you know, find growth any other way. But there's some data out today that's actually pretty scary in terms of any of ours' ability to go find businesses to buy. And it has to do actually with not what you think. It's the kids that are the problems. The kids of the owners are the problems here. I'll dig into some of that data here and then tell you how I think you could set yourself aside if you're looking for a business to buy. It's a pretty creative strategy, if I must say so myself. What they found was that the number of kids who are working for their parents at their businesses has doubled since 2018, and it's accelerating. The number of businesses with an adult kid working at them with the same last name as the parent. It went up 13% last year alone. You can kind of guess where this is going, right? The kids came out of college, a lot of them in 2017, 2018, 2019. They're pushing 25, 26, 27 now. The job market absolutely sucks for Gen Z. If you have kids who've recently graduated college, you can tell kind of and feel empathy for the pain I'm talking about here. My number of friends who send me resumes for their pretty smart, capable kids who would have gotten jobs easily in 2021, 2022, they can't get jobs now. Even good schools like University of Texas or Lafayette College where I went to college. These adult kids, they have baby boomer parents or Gen X parents, and, uh, those parents are trying to figure out their next stage in life. And a lot of them are bringing on the adult kids a lot more than they used to, to take over those businesses. They did a survey of businesses and business owners who are planning on transitioning their business in the next few years. Of the ones who had figured out what their plan was, 28% of those were going to have their kids take over the business. That's a pretty big number compared to where it used to be. Look, where it used to be was when I came out of college back in the late '90s, there was a certain kind of stigma about nepotism. And nepotism, you know, we all know that is where the parents give the kids a hookup. And the attitudes towards nepotism have really changed in the past kind of 25 to 30 years. When I was young, there was a stigma to it. Daddy gave you your leg up, mommy gave you their leg up. That's how you got started. Today, you got parents like me. I am 100% pro-nepotism. I see how hard it is out there. I'm going to do everything possible to give my kids the best advantage they can in life, even if that means bringing them into the business, training them to take it over. So look, if you're trying to get into entrepreneurship through acquisition, you've got these numbers trending against you in terms of kids coming into the businesses. And a lot of these businesses that are great businesses that you would want to buy are going to be transitioning to the kids. You've got a whole other segment of those businesses where if you own an HVAC company or a number of other businesses, private equity has been coming in like a vacuum cleaner and trying to buy as many of those as possible. So you're competing with them when you try to go buy those businesses. And lastly, like, it seems like every college entrepreneurship program is now promoting people trying to buy businesses rather than start them. You can see where this goes. Like, that's a ton of chasing too few companies for folks like you and me to go purchase. So how do you still make it happen? I mean, if you're going to go buy a business, things have changed over the past 7, 8 years. It used to be a lot less competitive when I was out looking at deals and stuff like that. And you could be somebody who was just kind of opportunistic. You could go look and see what kind of deals were out there and potentially pick up something that was reasonably priced. Now you have trouble getting a seller or a broker to even talk to you unless you have something that sets you apart from the other buyers. So the path around all of this and all this competition still remains the same thing. You have to go pick a niche that you're really going to own as a buyer and become an expert in that thing. You got to go talk to everybody. You got to get up to speed on it and you got to really become somebody that sellers will say, hey, this person knows not only how to talk to me about my business, but I'm going to have confidence after they buy it, they're going to do a pretty good job. I've had friends who've gone in and just said, like, I'm going to become the man at HVAC or I'm going to become the woman at insurance brokerages, or I'm going to become the X for X and just go in there and really understand that stuff. And I did that when I started to buy software businesses back in the day. Like, I just spent 6 months learning everything I could about small software business and what it would take to go buy one of those companies. Kind of in light speed, I bought my first company 6 months into searching. That's, in retrospect, kind of crazy compared to what the typical average is now. You're seeing a number of people who are putting together search funds and trying to go buy businesses. It's taken a couple years for some of them to go find their first deal, put it together, and close. It's tough out there for sure. Not all hope is lost. Not every baby boomer or Gen X has a kid that's going to be taking over. Not every business is appropriate for private equity, and not every search fund is going to find your particular deal. So in the end, the people I see that get deals done are the ones that go out hustle and make stuff happen. Don't give up hope, but the news out today, things are going to keep getting harder and harder. That's all I can promise you. And the trend doesn't appear to stop. Let me know what you think in the comments below. We'll see you next time.
