You need to build momentum if you want to find good investment opportunities.
When I started a few months back, I had ZERO deal flow.
I contacted brokers, accountants and investment bankers to get on their distribution list.
What started off slow has been compounding over time.
Went from receiving zero deals in a week to 4 in a day.
I’m still doing outreach and connecting with people, but the key takeaway is that your actions compound over time.
What you are doing TODAY will have a big impact on your results months from now.
Half of becoming extremely successful is not going insane from constant pressure, loneliness, discipline, uncertainty and consistency as the temperature increases.
The reason people don't make it is because they get fed up with these and turn down the temperature.
At some point they want "normal" and tap out.
So few do it because so few can actually tolerate the mental toll and fall back to their lesser ways.
Embrace going crazy where other turn back.
Key assumptions:
- There’s no cash on the BS
- They’re selling the company
EV is $200M, but they need to repay $250M and follow and order of priority in the debt
Senior lenders gets their full $150M back while junior debt only gets $50M and incur a 50% write-off
Equity holders get completely smoked and are left with zero
EOI accepted, going to the next stage: management presentation.
Good experience to be moving forward in the deal process.
Let’s see where this leads us.
A deal came in a few weeks ago:
$17.4M revenue
$4.6M EBITDA
26% EBITDA margin
Company’s been around for 79 years and management team wants to stay in place.
Currently drafting the EOI (expression of interest), which is the first step in the acquisition process.
Since it’s a brokered deal, the process is very structured and they really want to qualify all potential buyers.
This creates way more competition - brokers are incentivized to boost the valuation cause they get a cut % of the transaction value.
Let’s see how it goes.
Two investor meetings and coffee with an M&A banker today.
WHO you know is sometimes more important than WHAT you know.
If you want to make things happen in business, M&A specifically, you need to grow your network and treat it like it’s part of your business model.