Hey Biz-Buyers,

Welcome to this week’s Boring Business Brief, where we share some of the best insights, tips, and stories from our private biz-buying community.

Let’s get right down to business…

Today, in 5 minutes or less:

✔️ Buyer advice: Build a deal-making decision tree

✔️ Pro tip: The MOST important question to ask sellers right now…

✔️ 2 good links from the week in SMB

✔️ Who’s looking to buy a biz?

Buyer advice: Build a deal-making decision tree (and thank yourself later)

One Contrarian Community member recently shared their deal-making decision tree with the group and — lucky you — was open to us highlighting it here…

“Everyone needs a structure to filter out bad deals and recognize the good ones,” they explained. “I’ve looked at hundreds of deals, and this is the decision tree I use.”

Before we dive in…

… Here’s what you need to know: This is a generalized view of just one member’s decision tree.

Truth is, if you take 100 biz-buyers, ideally you’d find them using 100 different decision trees. Each buyer’s deal box, goals, and financials are different, so it makes sense that they’d weigh decisions based on different parameters.

In this instance, the member said, he “replaced [his] specific criteria with more generic representations.”

He also warned, “It’s easy to apply the steps out of order — for instance focusing on price and terms before evaluating if it is in your deal box or if it is a good business.”

Capisce? Now let’s give it a look…

One member’s biz-buying decision tree:

Step 1. Deal box

Question: Does the deal fit into your pre-determined and “well-defined” deal box?

Step 2. Good business

Question: Does the business pass checks on “stable to rising” sales, gross margins, SDE, NOI, and EBITDA, being in a good market and location, and whether there are “gross defects” in the business, its financials, or its financial history?

Step 3. Good price

Question: Does the business pass checks for a fair SDE multiple, and is the post-debt-service cash flow right for you?

Step 4. Good terms

Does the business pass checks on the following:

• “Seller carry of at least 10% (mitigate knowledge gap, post-sale engagement, and noncompete risks)”
  
  
• “A debt service coverage ratio > 1.5”
  
  
• “Can the capital stack (cash, equity, debt) be fully funded in a way that doesn’t hike risk?”

Pro tip: The MOST important question to ask sellers right now…

According to Contrarian Community facilitator and business broker Clint Fiore, this is THE most important question to ask sellers right now:

“Why are you talking to me?”

As Clint put it, “Owners are getting hit up constantly right now by cold outreach from PE, Searchers, Brokers, etc…”

The problem with this, as he explained, is that it’s started going to some owners’ heads.

They may not actually be looking to sell, but if offered the “right price,” a “wishful thinking, curious opportunist” might entertain the idea.

“If you ask the ‘why’ question,” though, Clint says, “and hear legitimate personal reasons they’re exploring selling due to their life circumstances changing, instead of economic opportunism and curiosity, then you are much more likely to have a serious, realistic seller…”

2 good links from the week:

💬 Try it: How to use Zapier and ChatGPT to generate personalized responses to SMB reviews

🎧 Listen to it: Finding a good business after 2+ years of searching

Who’s looking to buy a biz?

A partial list of REAL people who began their Contrarian Community journey in recent weeks…

• 🏠 A realtor with industrial manufacturing experience
  
  
• 🚗 A car wash owner and operator
  
  
• 🎤 A sales leader (and former professional singer)
  
  
• 🧑‍💻 A software engineer at a streaming company
  
  
• 🌳 A founder of a successful tree removal business, who said this:

“My driving force stems from a deeply personal connection to growth and impact. It’s about creating a legacy that extends beyond the boardroom — a legacy that touches lives, sparks innovation, and resonates with the human spirit...

...Whether it’s empowering individuals to reach their potential or fostering initiatives that leave a positive imprint on communities, my journey is fueled by the belief that each step forward is an opportunity to make a lasting difference. Here’s to the pursuit of purpose and the ripple effect of meaningful endeavors. 🚀 ”

… And ain’t that a hell of a way to sign us off.

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