Discover and read the best of Twitter Threads about #SMB

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Buying a business is a very difficult undertaking.

There is a reason that few people do it that consider it.

One of the critical items when it comes to the financing process is having a well written business plan. In this thread, I will cover what one looks like.
1/x: As the buyer of a small to medium sized business (SMB), you are the new variable that is getting introduced to the equation when it comes a business acqusition.
2/x: From a lender's perspective, this creates a risk. The seller's business is currently running at status quo. As a buyer, one of 2 outcomes will happen: You improve things, or you end up running the business into the ground.
Read 11 tweets
These are some great threads about how to buy a business with an SBA loan that I've seen on Twitter over the last several months.

#sba #smb #acquisitions #entrepreneurs
Read 6 tweets
One critical document that is required when you are buying a business that operates out of a leased location is a landlord waiver (also called a landlord agreement). In this thread, I'm going to cover what it is and why it's important.

#sba #smb #acquisitions #entrepreneurs
When a business is financed with an SBA loan, SBA requires that a lender takes a General Business Security Agreement (a "GBSA") on the assets that are being financed with the acquisition. 1/x

#sba #smb #acquisitions #entrepreneurs
The GBSA, which is perfected by the lender with a UCC filing, allows the lender to liquidate the collateral of the borrower in the event that there is a default on the SBA loan. 2/x

#sba #smb #acquisitions #entrepreneurs
Read 11 tweets
1/x: Buying a business can feel like a monumental undertaking as a searcher.

#sba #smb #acquisitions #entrepreneurs
2/x: First, you have to identify a target company and work through the broker and seller to vet the due diligence materials to ensure it is worth pursuing.

#sba #smb #acquisitions #entrepreneurs
3/x: Then, you submit an LOI and hope that it gets accepted.

#sba #smb #acquisitions #entrepreneurs
Read 11 tweets
I’ve interviewed 90+ entrepreneurs on my podcast

I ask what is the most impactful book they’ve read

Here are the Top 10 most interesting ones:
#1 The Psychology of Money

[ Personal favorite, especially these days ]

@morganhousel shares short stories about the strange ways people think about money to help teaches you how to reframe your view on money & investing

amzn.to/3ziRVgA
@morganhousel #2 Die With Zero
Bill Perkins (@bp22) provides a practical guide on how to get the most out of your money & life

amzn.to/3PUyPo8
Read 15 tweets
In this thread, I am going to cover how it's possible to purchase a $5 Million business with $260,000 of cash down. I hope that you find this thread useful and educational.

#sba #smb #acquisitions #entrepreneurs
1/x: SBA requires 10% equity for business acquisitions. This 10% is based on the total uses of funds for the acquisition. The total uses of funds includes the business purchase price, working capital, the SBA guaranty fee, and the closing costs.

#sba #smb #acquisitions
2/x: 1/2 of the 10% can come from a seller note that is on full standby for the duration of the SBA loan. This means no payments can be made on this loan until it is paid off.

#sba #smb #acquisitions #entrepreneurs
Read 12 tweets
A large number of SBA lenders entered the space in the last couple of years when 7(a) loans had the guaranty percentage increased from 75% to 90%. Unfortunately, many of the newer entrants don't know what they're doing (1 / x)

#sba #smb #acquisitions
I've spoken with searchers working with some of the newer market entrants and have felt their pain first hand when realizing the bank they're speaking with does not have preferred lender status or is telling them the wrong thing (2 / x)

#sba #smb #acquisitions
At Pioneer Capital Advisory LLC, I only work with banks on this list:

sba.gov/partners/lende…

These are the top volume SBA lenders. This list was last updated at the end of the first financial quarter.

(3 / multiple)
Read 4 tweets
In this thread, I am going to cover best practices with conducting due diligence on a seller during the process of a business acquisition.

#sba #smb #acquisitions #entrepreneurs #eta
1/x: In a business acquisition, one of the items that a bank will do during the pre-closing stage following loan approval, is having due diligence searches ordered for the seller involved in the acquisition

#sba #smb #acquisitions #entrepreneurs #eta
2/x: These searches typically include litigation searches, federal and state tax lien searches, and also UCC state level searches

#sba #smb #acquisitions #entrepreneurs #eta
Read 10 tweets
One of the things that I enjoy the most about being a loan broker is helping clients with finding the lender that offers the best solution. (1 / multiple)

#sba #smb #acquisitions #entrepreneurs
Each bank has its own unique credit box, meaning that some deals fit within a bank's lending area while others don't. As a loan broker, my job is to match your deal with the bank that offers the best solution for financing it. (2 / multiple)
One thing I have seen recently is clients that start down the SBA path, but then pursue another external option such ad conventional financing. (3 /multiple)
Read 5 tweets
#SMB How to make $1M per year with $150k in cash:
1) Partner with @search_invest once you have a signed LOI to raise 100% of the preferred equity capital on the world’s best common equity terms to you. In this example, you put 10% down and walk away with 80% of a $2.0M SDE business. Insane.
@search_invest 2) Grow the business a modest 5% per year.
Read 7 tweets
Here's how you take $100k and turn it into $6.6M in 10 years by buying a profitable business (assumptions galore).

Let's break it down:
1. You buy a business you found in the industry you like for $1M.

The annual revenue is $1.5M.

The SDE (owner profit) is $250k per year.
2. It is a pest control company that has been around for 10 years.

It qualifies for an SBA loan and the bank requires you to put down 10% ($100k).
Read 14 tweets
Hey #SMBtwit,

Have you ever thought about HOW you ask questions during diligence? I mean, really thought about it? Because how you ask questions matters, a lot...

🧵👇
You're all smart people. You're acquiring a business, so you know what information you need to look for. How you unearth the info you need is very important. You need to be strategic w/ your questions. 2/13
Let's talk about 'Walking the Stairs'. @ProfAWBrooks from @HarvardHBS does a wonderful job on this topic so hopefully, if I butcher this, she can offer some corrections... 3/13
Read 15 tweets
Buying a profitable business is the safest way to become a millionaire in less than 10 years.

Don't believe me?

3 facts that prove it:
1) Those that buy a $1M+ business experience a 98%+ success rate (ref. Buy Then Build)
2) According to the Small Business Delinquency Index (SBDI) #smb loans have been under a 1.5% delinquency rate nationally since 2012.
Read 13 tweets
I left a cushy finance job about a year ago and bought a small home service business.

The last year has been a wild ride of exhilaration, stress, anxiety, fear and fun.

I’m still just getting started, but here are some important lessons I’ve learned over the last year:
1. If there’s one thing I did right, it’s I got in the game. Get off Twitter, podcasts, etc. GO DO IT! Be smart and calculated, but you aren’t going to find the perfect deal. I certainly didn’t, and made a lot of mistakes. But I’m in the game, figuring It out, and it’s working.
2. People are everything. Your spreadsheets don’t matter. Do your people trust you? Do they like working for you? Will you help enhance their lives? Do you care about them? These matter. Everyone talks about how hard it is to find employees (and it is), but that’s a YOU problem.
Read 10 tweets
After asking @SMB_Attorney a question last week he referred me to his Newsletter(getrevue.co/profile/smb_at…) so I took some time and read 17 of them so here are 13 lessons I got out of them that could help a first time #smb searcher...so get ready for the ride!!
lesson 1:
The Major Players in the M&A Process are :
1. Buyers
2. Seller
3. Target Companies
4. Target Management
5. Brokers
6. Lawyers
7. Accountant
8. Investment Bankers
Lesson 2:

the Detailed Overview of a Typical M&A Transaction:
1. Initial outreach
2. NDA
3. Due Diligence
4. Pre-LOI Preliminary Due Diligence
5. Post-LOI Preliminary Due Diligence
6. Financing
7. Key Employees
Read 23 tweets
Why @angomonNFT is worth investigating, and why now. Teaser at the end.

TLDR: Release of Roadmap 2.0 will drive a short squeeze of the low 3500 supply Angomon collection.

Value proposition broken down by:

1. Evidence
2. Adoption Rate
3. Diversification
4. Brand

A thread...
1. Evidence

Project minted on Nov 20th, over 4 months ago. Engineers have continued to under promise, over deliver. Planets have been delivered last week and Angoverse, the development of Angomon metaverse continues at a ferocious pace. Team doubling in size.
I would argue by far the most undervalued #Metaverse play in Solana. Check demo out here: planets.angomon.io
Read 13 tweets
Hey SMB people:

🧵 Looking at a biz that sells sheds and auxiliary buildings. Not much inventory, mostly custom orders taken from customers and sent to the builders. Biz receives unit from builder and delivers to customer.

What kind of multiple on EBITDA I should be targeting?
And keep in mind I’m a real estate guy so please explain it like I’m a full-on idiot. #SMBTwit #SMB
Read 4 tweets
Do you have Business Partners?
#SMB #ETA

How Much Is Your Share Worth If You Die or Disabled?

Multiple Owners NEED a Buy-Sell Agreement to Facilitate How An Owner Is Bought Out If Certain Events Happen

7 Tips From The Perspective of A Biz Appraiser

(Not a lawyer)

🧵👇
1/n A Buy-Sell Agreement is the policies governing how ownership will change hands among multiple owners of a biz based on certain events called, Trigger Events, like death, divorce, disability, or an owner who wants out
2/n Here are some 7 Best Practices

1. Get all owners together to get on the same page. Treat this seriously because the Buy Sell agreement is usually triggered in very emotional circumstances like death.
Read 10 tweets
Want to Buy a Private Business?

When you look at financials here are some tips:

• Ask for Tax Returns even if it’s a Schedule C
• Don’t take SDE at face value
• Analyze Owner Comp
• Confirm Market Rent
• Analyze Expenses

#SMB #investing #fintwit

🧵👇
1/5 Ask for comp tax returns of any sort. If it’s a sole proprietorship they may report a schedule C on their personal return. Ask for it. If they are lying to the government they will most definitely lie to you.
2/5 Biz brokers provide Sellers Discretionary Earnings (SDE) which adds back owners comp plus other, sometimes important expenses. Analyze the add backs. Don’t take them at face value. Ask if the owner works and if it’s a market salary for the effort. You may need to pay someone
Read 7 tweets
⚖️ LEGAL LOOKOUT 1: We’ve read with interest the amicus brief below filed by 24 health policy experts in the @texmed v. @HHSGov lawsuit, as we filed one, too.

Without any further digging, though, we can see off the bat that a majority of the so-called experts who signed

(1/8) ImageImageImage
onto this brief are funded by the #insurance industry.

We respect and cherish the fact that everyone party to a significant #policy debate like this one over #regulatory implementation of the #NoSurprisesAct has a voice.

But, a question to @RonaldKlain, @SecBecerra, and

(2/8)
@BrooksLaSureCMS: How can you reconcile the fact that the administration’s #regulations rely on these bankrolled academics and experts while also claiming that these regulations help #patients and our #healthcare system? This is an alternative reality.

(3/8)
Read 19 tweets
(1/4) Looking at doing an add-on for which the owner won’t do seller fin (is buying RE with proceeds), and for which I prob can’t do SBA for couple reasons. Very complimentary revenues and strong rationale for deal, but also not without issues. #SMB #Finance
(2/4) True CF is quite a bit less than suggested given need to hire at least one role to backfill owner. So even if I could get comfortable with purchase price, not sure taking on more debt is best move for combined biz.
(3/4) That said, it feels too early in my ownership to give up substantial (or really any) equity. So I am curious if anyone is aware of creative & attractive comparables? I hear people have raised capital based on TEV instead of equity value, which would be interesting.
Read 4 tweets
(1/5) When completing my deal, the seller was very focused on keeping all working capital (i.e. AR less AP) at close. This required me borrow addt'l $$ to be added to the B/S to fund expenses until new AR began converting to cash #SMB #startup #Finance #business #Acquisitions
The challenge with this was twofold: 1) estimating WC in SMBs can be difficult, and a growing business in a post-pandemic environment makes it much more so. Therefore, borrowing a pre-determined amount vs. using a line of credit is very difficult and frankly risky
That said, my lender didn’t offer lines of credit, which left me with no choice. 2) Second challenge with seller keeping WC is the operational hassle of your new team receiving checks for old business and having to pass those on to the seller.
Read 5 tweets
I lost my life savings 🏦 and went over $150k into debt
buying a business with my brother

A 🧵
1. I bought a business with my brother in diesel repair/fleet maintenance
2. Things were going great, until they weren't
3. We found out the previous owner had been stealing from customers
4. We immediately fixed it and notified the customers
5. Took a big hit credibility wise
6. Found out previous owner was also trying to steal our customers and employees
7. We lost some of both
8. We tried everything: confronting him, cease & desist, holding back payments
9. We felt completely helpless
10. We kept going
11. We started to hit our groove
Read 10 tweets
A few people have asked, so here is a four month update on my #smb journey:

So far, I would say things are going OK. Certainly not a @StrongpointRich rocket ship story, but customers are calling, no technicians have quit, and money is coming in each day.
Challenges:

1. Revenue is down slightly from 2020

Why? I came in with essentially 4 revenue generating techs, while last year they ran 5-6. This fact was significantly downplayed during due diligence, but ultimately it was a big miss on my part.
2. Culture:

I’ve learned the previous owners were not easy to work for. Despite core employees with 15-20 years tenure, turnover was high. This created a low-energy work environment. Fortunately, the employees I have are great - have pride in their work and excited for change.
Read 14 tweets

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