What to look for when buying a small business | My First Million Podcast

What types of companies are you trying to buy? So you're trying to buy— is it a certain price point? Is it a certain business model? Is it a certain type of owner? What are you trying to buy?

Yeah, so we first want to buy something that we think is gonna be durable and around for a really long time. So, you know, if you look at our current portfolio, we are in the swimming pool business, like digging holes in the ground, shooting concrete. We're also manufacturing in that space as well. Another company that's unrelated in the backyard product space, so a bunch of different SKUs that sell through mass retail. We are— we have a military recruitment firm. That was the first firm that I acquired, Medi-Cross. Um, we've got a real— a military recruitment firm.

So is that like lead gen for military?

Yeah, so we actually, uh, so we work— I mean, we have a number of different clients, but one of our main clients is a civilian branch of the Navy that resupplies the ships that never come into port. So it's called Military Seal of Command, and we're responsible for finding and onboarding all of their staff on a yearly basis.

So it's like a staffing firm for a ship?

Yeah, well, for a whole branch of the military. So it's, uh, there's their staffing. I mean, there's a lot, uh, you know, 14, 15, 1,700 civilian mariners a year into that division. So it's a pretty large operation.

But is it digital?

Some of it's digital.

Yeah, yeah, we have, you know, online application products.

But not mostly?

I mean, there's a lot of physical activities as well. We have physical recruiters and it's, you know, online, offline. It's the not sexy, where the rubber meets the road, real deal business.

So we were talking about some of the different businesses you guys owned. So MediaCross, which is a military recruitment firm, swimming pool business, Backyard Space.

So you have a couple of there.

So you were saying you're looking for durable businesses. That's like, let's say, attribute one. What are the other sort of key attributes you're looking at?

Yeah, I mean, so we want to find a leadership team that we can partner with. There's so many, you know, it's so hard to grow a business, right? And so a lot of the businesses we're looking at, we either call it has been right before the line of professionalization or maybe it's just crossed it. And there's this, this real interesting, you know, sort of in-between gap where a lot of these firms, they're too big to be small and too small to be big. And the leadership team's kind of capped out. They're just brute forcing as much as they possibly can, but they don't have the systems, the talent on staff to be able to grow larger. And so a lot of the times we're trying to figure out from them, you know, do they want to get bigger? There's some firms that we talk to and they say, well, even though they'll say, "I want to get bigger," but the, you know, the CEO's answering 60 calls a day on his cell phone. And I mean, there's just no way, right? And so we're looking for a leadership team that I think has the base skills, is really, really excellent at what they do. And we're looking for the, the company to have a position in the marketplace that is, um, protected somehow, right? So I mean, we're not looking to get into just commodity-type businesses. We want them to have something unusual about them that we can really build on and help them grow. Um, and then, you know, this is gonna sound like a, like maybe a no-brainer obvious one, but, uh, we got to get to a price in terms that, that, that are acceptable to both parties, right? And, um, there's roughly 400 decisions that have to be made sort of during the acquisition process. I mean, it's 400 opportunities to not agree, and it's very difficult and time-consuming. And so a lot of it is just trying to make sure that we think that a deal could be done as well.