Hey Biz-Buyers,

This newsletter is where we share some of the most useful insights, tips, and stories from inside our private biz-buying community.

But first…

Ever seen this “EBITDAD” shirt out in the wild?

If you think the shirt is…

A) Relatable (even though you’re not sure what the heck it means)

B) Speaking your language

C) Nerdy, but in a good way

… Well, you’ve come to the right place. That’s one of our facilitators rocking that shirt, and determining what being an “EBITDAD” actually entails is exactly the kind of mystery that makes this community a blast.

We’ll work on solving that another week. For now, on to this week’s good stuff…

Today, in 5 minutes or less:

✔️ In the weeds: About that 50/50 biz partnership…

✔️ Buyer tips: Tools for building a deal-sourcing MACHINE in 2024

✔️ Let’s get real: What biz-buying struggles look like in real-time

✔️ 3 links from the week in biz-buying

In the weeds: About that 50/50 biz partnership…

Recently, one community member asked the group about a 50/50 partnership structure they’re considering for a future deal.

This was our immediate reaction:

But let’s walk through it anyway. Here’s how it would work:

1. A capital partner would split a down payment with this member on a biz in exchange for 50% of the biz
   
   
2. The member would work as the full-time GM/operator of the biz and take a market rate salary
   
   
3. The capital partner would personally guarantee the SBA loan, but take no salary

“Do you like this arrangement of 50% equity for 50% down payment,” he asked.

Got any thoughts on the specifics? Here’s one member’s analysis…

• Do the math: “50% ownership on just 50% of the down payment is a hefty premium. If you assume a 10% down payment, he is getting significantly more than the value of his cash contribution.”
  
  
• But all things considered… “But if you are both putting half cash down and signing on the loan, the difference is in the operation, which you are pulling a salary for. So it seems much closer to the 50% mark.”
  
  
• Final thoughts: “Maybe you sourced the deal and that justifies moving away from 50/50…”

Big picture: Here’s what the community has to say about 50/50 deals…

• “50/50 was talked about at the [Contrarian Community] event a lot. It’s generally not a great idea — someone needs to be in control. The quote used: It is not that one general is better than all others; it is that 1 general is better than 2."
  
  
• “If you go forward, do all the pre-fighting ahead of time. AKA what do you do if someone wants out? What happens if someone doesn’t pull their weight? Who has the final say on which decisions? And get it in writing.”

Buyer tips: Tools for building a deal-sourcing MACHINE in 2024

Here’s the…. deal.

We’re about to spill (a few of) the beans on tools for building a deal-sourcing engine that’s hotter than a black Friday sale in 2013.

How to build a solo deal-sourcing powerhouse:

Tools? You’ll need ‘em.

Members often share lots of valuable resources for doing this. A few recents:

• Kumo: An internet scraper for finding deals
  
  
• ProbablyAGoodDeal.com: Offers early notifications for businesses for sale across the USA
  
  
• Some combination of HubSpot, Notion, Trello, Monday, Zapier, or Calendly for project management and productivity
  
  
• Postalytics: Ideal for direct mail automation

Oh, you want more? Okay, here’s more.

But let’s dial it in and get a bit more specific. Here are some broker-sourcing tips from another member…

Use these resources, he says:

1. BizBuySell
   
   
2. IBBA
   
   
3. Interexo

Oh, and one more… BNI. As for why BNI, specifically, is helpful…

• “Creating a relationship with brokers gives you an unfair advantage over other buyers who don’t utilize this added tool in your business buying toolbox.”
  
  
• “I recently went to a BNI to meet small business owners in person a few weeks back. It was valuable as you get a chance to network in your local community… The internet works, don’t get me wrong, but I think if done well, the in-person networking can lead to some great conversations and connections.”

Let’s get real: What biz-buying struggles look like in real-time

Biz-buying is no walk in the park. We’re not gonna sugar coat it — it’s hard AF. It’s a lengthy, grueling, uphill battle from day one. There are lots of hurdles, setbacks, and “stuck in the mud” moments along the way.

One member is going through one of those moments right now.

So, what’s the play? Lower the parameters and risk becoming a time-for-money trading card, or stick to the dream and face the financial hurdle? It’s a real head-scratcher, but guess what? In this community, we don’t just share struggles; we share solutions.

Here’s what happened after they posted that:

Immediately, one member offered to hop on a call. “Let’s hop on a call sometime and talk. We have a similar background so I can tell you my approach, lessons learned, and help hone in on businesses that fit your deal box. Pro Tip: It takes more time than you think to find the RIGHT deal.”

That’s what we love to see.

3 links from the week in biz-buying:

❤️‍🩹 More from EBITDAD: How he handles family healthcare expenses (as an entrepreneur)

💰 Great resource: 26 negotiation techniques for PE deals…

😮 Read up: Learn about the new filing requirements for biz ownership

What’d you think of this week’s newsletter?

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