Entrepreneurship Through Acquisition: A New Path to Business Ownership

Invest in You

In this episode Fredrik engages with Harry Ratcliff, an expert in mergers and acquisitions (M&A) and co-founder of DealSage. They discuss the importance of momentum in the M&A process, emphasising that timely preparation and clear communication can significantly enhance deal success. Harry shares insights from his investment banking background, highlighting common pitfalls buyers face, such as inadequate due diligence and misaligned expectations with sellers. He introduces the concept of "entrepreneurship through acquisition," showcasing how aspiring entrepreneurs can benefit from acquiring existing businesses rather than starting from scratch.

KEY TAKEAWAYS

Momentum is Critical in M&A: Maintaining momentum throughout the M&A process is essential for success. Delays and uncertainties can derail deals, so it's important to keep all parties informed and engaged.

Understanding the Lower Middle Market: There is a significant opportunity in the lower middle market, where businesses with lower EBITDA figures are often overlooked. This space is characterised by a lack of transparency and structure, presenting both challenges and opportunities for buyers.

Importance of Diligence: Buyers often fail to conduct proper due diligence, which can lead to unforeseen issues later in the process. Understanding the historical and current state of a business, including legal matters and employee transitions, is crucial.

Creative Deal Structuring: Creative deal-making can involve various structures, such as seller notes and earnouts, which align the interests of buyers and sellers. These structures can help manage risk and ensure that both parties feel secure in the transaction.

Leveraging AI for Transparency: Advances in AI can provide valuable insights and streamline the due diligence process, allowing buyers to make informed decisions quickly. The goal is to reduce the time spent on deals that may not be viable, enhancing overall efficiency in the acquisition process.

BEST MOMENTS

"The number one key to a successful M&A process is momentum. Time kills all deals, and if processes start to lose speed, uncertainty creeps in and derails everything."

"There's this entire lower middle market industry, and people are buying these businesses. My mind was blown; I wanted to understand this space more."

"Creative deal making is really one way how deals are being made in terms of finding a problem solution for the buyer and seller."

"We want to stop you from buying a business that you shouldn't. We want to create way more transparency in this traditionally opaque space."

"Finding the right partner is always a challenge. It can really just be a 10X, not a 2X, to have the right partner on board."

RESOURCES

https://www.linkedin.com/in/harryratcliff/⁠⁠

ABOUT THE HOSTS

Serial entrepreneurs Fredrik, Charlie and Ivan Sandvall love sharing ideas and interviewing world-class entrepreneurs and influences. Invest In You is about investments, entrepreneurs, personal development and doing fun things. They hope to ensure you to take action, helping others and yourself, plus enjoying the journey we call life.

CONTACT METHOD

Fredrik Sandvall

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Charlie Sandvall

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Ivan Sandvall

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