What You Should Know Before Buying A Business: Acquisition Criteria

This is part one in my series on the most important factors to know before you buy a business.
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Roland Frasier is co-founder and principal of three current Inc. Magazine fastest-growing companies and he has founded, scaled, or sold 24 different 7 to 9 figure businesses ranging from consumer products to industrial machine manufacturing companies with adjusted sales ranging from $3 million to $337 million.
Currently growing Scalable.co, DigitalMarketer.com, RivalBrands.com, and Plattr.com while advising over 150 other companies on digitally centric customer acquisition, activation, referral, retention, and revenue strategies and plan implementation.
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Subscribe to Roland Frasier 👉 / @rolandfrasierepic
To learn more about Roland Frasier 👉 msha.ke/roland...
Connect with me on social:
🎵 TikTok: / rolandfrasier
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📱 Facebook: / rolandfrasierpage
💼 LinkedIn: / rolandfrasier
Subscribe to Roland Frasier 👉 / @rolandfrasierepic

[@jamesbrean8004]

I will definitely keep that in mind

[@kalebbillig3472]

I’ve got a plan to buy storage, dumpster/container rental, moving truck rental and moving businesses… then I plan to buy a bunch of them and then I can offer container drop off , the moving companies can pack and load and then we can ship it to any of storage yards or rental locations, or at another house! I know it’s similar to uhaul but it goes a step farther in providing service, where uhaul is more geared towards diy moving and storage, we will still have that option but will capitalize on the higher income section of the market

[@RolandFrasierEPIC]

That’s great Kaleb!

[@glennD15]

mr frasier, thank you so much for sharing your experience and knowledge. I have been actively searching to acquire a business and the way you break down methods are easily understandable and makes so much sense.

[@RolandFrasierEPIC]

You’re very welcome Glenn. Love to hear how it goes for you!

[@MikeyDonios]

So much great info. Glad I came across this channel!

[@claysdogtraining9702]

I feel so blessed to know your channel, great value for time, thank you!

[@RolandFrasierEPIC]

Thank you Clay!

[@VictorZimbardi]

Great intro video. I am beginning to consider acquiring an architecture firm. I am about to graduate with a degree in architecture and have actually worked at this firm before.

[@RolandFrasierEPIC]

That’s great Victor. So much easier to acquire than to start from scratch, and what a great way to get started in your new career. Congrats on your pending graduation!

[@user-gq9ur9yv1q]

We need synergy

[@boni_traxton9436]

I’m a young guy from Florida, I started a mobile golf cart cleaning service since I’m surrounded by older people. But I don’t want it to be my only thing I want to have an asset that I can call mine and will be a income producer when it’s a dry season for my other business. I have most past expierince in restaurants I was a dishwasher for many years so I am looking into a small ice cream shop or sub sandwich shop. Or retail like a clothing store, haircare supply store Something under $60,000

[@RolandFrasierEPIC]

That’s great, you should be able to find a lot of things that will work for you. I’d be careful with the ice cream shop because even though people eat ice cream all year long, it is still seasonal with more sales coming in hotter months. Between the ice cream shop and sub shop, I like the sub shop better, but I will say that selling ice cream by weight is a pretty good business too. Good luck and let me know how it goes!

[@TshepoKotelo]

What if you have no experience in something that interests you?

[@jamesmalin4252]

Hi Roland, thank you for helping others in their journeys and providing relevant content. I currently own a software consulting business and was recently pre-approved for up to 8MM with a combination of SBA financing and secondary loan options. I might be able to actually qualify for 100% financing depending on the NAICS code of the prospective business which is amazing. Any financing of course depends on the financials of the target business. First, is there anything you see that would make this a bad decision in the current market? Let's say the rate is prime + 2% (10.5%). Would you try to acquire a business above 5MM since the competition may be lower or would you go the route of 2-3 businesses? I understand that by doing so, you're also likely increasing the time needed to run the business by 2-3X if you're acquiring more than one. Also, do recent MBAs from top tier schools like Harvard have what it takes to run a business at these sizes (let's say 750K-2.5MM EBITDA) or lacking real-world experience makes that a non-starter for someone to help run the business(es)?

[@javi_park]

great video. any videos/resources you recommend for founders who want to position for a future acquisition?

[@RolandFrasierEPIC]

100% Javi, take my free challenge at GetEpicChallenge.com

[@Nick-lf2jo]

Roland, thank you for everything you do and share. As a complete novice at what point do you seek out an accountant and lawyer, would it be when you're going through the due diligence ? And do you have a video on how to interview and find these professionals ? One of my concerns is finding one you can trust to do a good job for you. Any thoughts would be appreciated .

[@RolandFrasierEPIC]

You’re welcome Nick! So, if you are doing this using the no money out of pocket strategies that I share, I think the answer to your question is yes. You can have the attorney come in post-LOI to help with the final purchase agreement and the attorney and accountant can help with the due diligence. If you use the LOI as intended as a non-binding “term sheet” of the major deal points, then get seller’s agreement to that, you will save a lot of money vs having an attorney all that time for many deals which ultimately fall out during that LOI negotiating process. If instead you have the professionals come in once you have agreed to all the major deal points and have an agreement in principle with the seller, that avoids paying professional fees for deals that don’t work out. Thanks for the suggestion to make a video of how to interview these professionals. I will pass that on to the team. In the meantime, just look for attorneys and accountants who specialize in M&A (mergers and acquisitions) and have experience in representing buy-side acquisition entrepreneurs like yourself. Good luck!

[@user-zh7ik1lq6f]

@@RolandFrasierEPIC Great, ty for your complete reply

[@danielkearns9240]

Have you thought about playing the piano for an intro? It would go well

[@RolandFrasierEPIC]

Great suggestion, I'll work on that.

[@geniushughes8287]

I need something that's going to last the next 50 years the brand new running business because of the brand new system they're putting in

[@thegardenofsteven9907]

I look forward to joining your training when it becomes available.

[@RolandFrasierEPIC]

Steven, you can join us at GetEpicChallenge.com for our free training.

[@HandsOnRealEstate]

Wouldn’t it be smart to buy different types of businesses that hedge against each other in different economical situations?

[@RolandFrasierEPIC]

Yes, that’s a good strategy too. There are several different approaches to growing a portfolio of companies. Different companies in non-correlated industries can be a good hedge against changes in economic conditions, but can also present challenges with over-diversification and difficulty understanding, running and integrating several different businesses. On the one hand, you are more protected in the event one of the businesses underperforms, and on the other you have several completely different teams and types of businesses to manage. Another option is to “roll up” several businesses in the same industry, whether they are direct or indirect competitors (called a horizontal roll up) or non-competing but complementary (referred to as a vertical roll up). This has the advantage of potentially tightly integrating all of the acquired businesses under a single experienced management team and creating an appealing acquisition candidate for a strategic buyer, but also creates under-diversification risk and can subject you to more volatility as economic conditions change. There really is not a right or wrong way to go here, just different approaches. :)

[@HandsOnRealEstate]

Wow thanks for the detailed response. I am a real estate investor looking grow as an entrepreneur.

[@vascoapolonio2309]

So, i buy a profitable business in a way that i will secure my profits, regardless the market flutuations, down grading wages and laying off people...

[@RolandFrasierEPIC]

That is correct Vasco.

[@aqin713]

Very insightful

[@RolandFrasierEPIC]

Thank you!

[@gustavmunch9691]

what would be the first step to be able to buy a business, without knowledge and cash?

[@RolandFrasierEPIC]

Check out my playlist for more information kzbin.info/aero/PLC-3YnRGiaG3ghpCigJjU_9uuaMAt998V or if you want to get a jump start and learn my exact process join the EPIC challenge bit.ly/rfepicchallenge

[@JM-hv9jq]

What's up with your eyes are those weird contact lenses you have on?

[@RolandFrasierEPIC]

Had some medical issues with them I had to fix. :)