10 Concepts We Can Learn About M&A and Growth Via Acquisition From How2Exit's Interview With Marty Fahncke - Watch Here
Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron
Concept 1: Grow Business Through Acquisitions
Growing a business through acquisitions is an attractive option for many entrepreneurs. Acquisitions can be an efficient way to quickly expand a business, gain market share, and increase profits. Marty Fahncke, an e-mergers and acquisitions advisor and author, has been helping businesses scale to over a billion in revenue and executing over 400 million in mergers and acquisitions. He is an expert in this space and has learned a lot from his own experiences.
Marty’s first foray into the world of mergers and acquisitions came when he and a couple of friends launched a business that was acquired for seven figures after just 18 months in business. This gave him a skewed perception of what it takes to sell a business, as he thought everyone had people knocking on the door wanting to buy their business.
However, Marty has since learned that buying and selling a business can be a time consuming, frustrating, and stressful process. He has also learned that it can be rewarding and lucrative. Marty has helped businesses grow through acquisitions by helping them execute a growth through acquisition strategy. This strategy involves identifying potential acquirers, negotiating the deal, and closing the transaction.
Marty’s experience has taught him that growing a business through acquisitions can be a great way to increase revenue and profits. It can also be a great way to quickly expand a business and gain market share. However, it is important to understand the process and the risks involved. It is also important to have an experienced advisor to help guide you through the process.
Marty Fahncke’s experience in the world of mergers and acquisitions has taught him the value of growing a business through acquisitions. He has helped businesses execute a growth through acquisition strategy and has seen the rewards that can come from it. For entrepreneurs looking to quickly expand their business, acquisitions can be a great way to do so. However, it is important to understand the process and the risks involved and to have an experienced advisor to help guide you through it.
Concept 2: Acquire Businesses To Grow
One of the key takeaways from Marty’s experience is that mergers and acquisitions are not just for the big players on Wall Street. Any successful business owner can expand their portfolio and net worth by leveraging their operations through acquisitions. For example, a manufacturer may have a manufacturing line that is only running at 60% capacity. By acquiring a business that is selling a similar widget, they can fill that capacity and make their core business much more efficient.
Acquiring a business can also be a great way for someone who is looking to retire to still stay involved in their business while stepping back from the day-to-day operations. This is known as “acqua-retiring” and it allows the retiring entrepreneur to still have a say in the business while allowing the new management team to take the reins.
In conclusion, acquisitions can be a great way to quickly grow a business. However, it is important to understand the process and the risks involved, as well as to have an experienced advisor to help guide you through it. Acquisitions can also be a great way for entrepreneurs looking to retire to still stay involved in their business while allowing a new management team to take the reins.
Concept 3: Retain Equity For Semi-Retirement
Retaining equity for semi-retirement is a great way for entrepreneurs to transition out of their business while still maintaining some level of involvement and ownership. Retaining equity allows entrepreneurs to receive a portion of the sale price of the business upfront and the potential to receive additional profits in the future if the business grows.
The key to a successful retained equity deal is finding the right buyer who has the right mindset and skills to grow the business. This is especially important if the seller is planning to stay involved in the business in some capacity. The new owner should have the experience and resources to take the business to the next level, while respecting the seller's wishes and allowing them to remain involved.
Retaining equity can also be beneficial for the buyer. Acquiring a business with the seller remaining involved can reduce the risk for the buyer, as the seller will still have the expertise, network, and connections to help the business grow. Additionally, the buyer may benefit from the seller's existing relationships with clients, suppliers, and other stakeholders.
Concept 4: Acquire Businesses Without Cash
Acquiring businesses without cash is becoming increasingly common. With the right strategies and resources, entrepreneurs can acquire businesses without having to put up a large amount of their own cash. This can be done through revenue-based financing, hard money, and the Small Business Administration (SBA). Revenue-based financing allows the buyer to use the existing revenue of the business to finance the purchase. Hard money is a short-term loan usually secured by real estate or other assets. The SBA is a government agency that provides loans to small businesses to help them purchase or expand.
Additionally, entrepreneurs can look to equity swaps as a way to acquire businesses without cash. Equity swaps involve exchanging equity in one business for equity in another. This allows the buyer to acquire a business without having to put up any of their own cash. It also allows the seller to receive equity in the buyer’s business in exchange for their own.
Acquiring businesses without cash can be a great way for entrepreneurs to grow their businesses without having to put up a large amount of their own money. It also allows the seller to receive equity in the buyer’s business in exchange for their own. However, it is important to understand the process and the risks involved, as well as to have an experienced advisor to help guide you through it. By understanding the process and having the right strategies and resources in place, entrepreneurs can acquire businesses without cash and take their business to the next level.
Concept 5: Reduce Overhead For Profit
Reducing overhead, businesses can become more efficient and profitable. It is important to look at the current marketplace and determine what can be done to reduce costs. It may be possible to hire fewer employees and still maintain the same level of productivity, or to outsource certain tasks. Additionally, businesses can look for ways to increase their economies of scale, such as merging with other businesses or acquiring other businesses.
Reducing overhead can also help businesses increase their profits. By cutting costs, businesses can free up funds for special projects or to invest in new markets. This can help businesses become more competitive and increase their profits. Additionally, businesses can use the extra employees to focus on the core operations of the business, such as accounting and marketing.
When looking to acquire businesses without cash, it is important to understand the risks involved. It is important to understand that brokers may not always be the best option, as many businesses listed by brokers never sell. Additionally, it is important to understand the different ways to fund a business, as there are more than 200 ways to do so.
In conclusion, entrepreneurs can acquire businesses without cash by reducing overhead. This can help businesses become more efficient and profitable, while also freeing up funds for special projects or to invest in new markets. However, it is important to understand the risks involved and to have the right strategies and resources in place. With the right strategies and resources in place, entrepreneurs can acquire businesses without cash and take their businesses to the next level.
Concept 6: Avoid Broker Bidding Wars
When it comes to buying or selling a business, it is important to be aware of the potential pitfalls of broker bidding wars. Brokers are often hired to help facilitate the sale of a business, but they can also be a major barrier to closing a deal. Broker bidding wars occur when multiple brokers are competing to get the highest price for a business. This can lead to inflated prices and, in some cases, can even lead to deals falling through.
The key to avoiding broker bidding wars is to do your research and be aware of the market value of the business you are interested in. It is also important to understand the difference between a broker and an advisor or investment banker. Some brokers find listings, put them out on websites, and wait for them to sell. Advisors and investment bankers, on the other hand, usually build exit portfolios, create data rooms, and actively seek out buyers that fit the criteria of the business.
It is also important to be aware of brokers who are overly optimistic about the value of a business. These brokers may tell potential buyers that they can get a higher price than the market value of the business. It is important to be wary of these types of brokers and to do your own research to determine the true market value of the business.
Finally, it is important to interview brokers before hiring them. This will allow you to determine their track record and get a better understanding of their approach to the sale of a business. It is also important to have realistic expectations when it comes to the sale of a business.
Overall, broker bidding wars can be avoided by doing your research, understanding the difference between brokers, advisors, and investment bankers, being wary of overly optimistic brokers, and interviewing brokers before hiring them. By following these tips, entrepreneurs can acquire businesses without cash and take their business to the next level.
Concept 7: Strategically Target Prospective Buyers
When it comes to acquiring businesses, many entrepreneurs find themselves in a bidding war with brokers. This can be an expensive and time-consuming process, but there is a better way. By strategically targeting prospective buyers, entrepreneurs can avoid the bidding war and acquire businesses without cash.
First, it is important to understand the difference between brokers, advisors, and investment bankers. Brokers are typically hired to list a business for sale and attract buyers. They may also provide advice on pricing and negotiating, but they do not have the same level of expertise as an advisor or investment banker. Advisors are more involved in the sale process and often provide advice on pricing, negotiating, and other aspects of the sale. Investment bankers, on the other hand, are typically hired to help the seller find a buyer and provide advice on the sale process.
Second, it is important to be wary of overly optimistic brokers. These brokers may promise a high sale price and a quick sale, but may not be able to deliver on these promises. Instead, it is important to interview brokers before hiring them and ask questions about their experience and track record.
Third, entrepreneurs should do their research and develop a list of prospective buyers. This list should include existing clients, vendors, competitors, partners, and other contacts. Once the list is developed, entrepreneurs can use cold calling, emails, LinkedIn connections, and direct mail campaigns to reach out to prospective buyers.
Fourth, entrepreneurs should be strategic in their approach. They should look for buyers who would make a great acquirer for their business and who have the resources to make the acquisition. Finally, entrepreneurs should have an advisor or investment banker involved in the process to help them negotiate the best deal possible.
By following these tips, entrepreneurs can acquire businesses without cash and take their business to the next level. By understanding the difference between brokers, advisors, and investment bankers, being wary of overly optimistic brokers, and interviewing brokers before hiring them, entrepreneurs can avoid the bidding war and find the right buyer for their business.
Concept 8: Stay In Your Lane Of Expertise
The concept of staying in your lane of expertise is an important one for entrepreneurs to consider. Staying in your lane means focusing on the areas where you have the most knowledge and experience. For example, if you are an expert in marketing and strategy, you may focus on businesses that need help with marketing and strategy. By focusing on the areas where you have the most knowledge and experience, you can maximize your chances of success.
Additionally, staying in your lane of expertise allows you to capitalize on your existing skills and connections. If you have expertise in a certain industry, you may be able to use that expertise to identify potential opportunities for growth. For example, if you have experience in the concrete industry, you may be able to identify potential suppliers and partners who could help you grow your business.
Finally, staying in your lane of expertise can also help you avoid taking on too much risk. By focusing on the areas where you have the most knowledge and experience, you can reduce the risk of making poor decisions. Additionally, by staying in your lane, you can reduce the amount of time and energy you need to dedicate to researching new industries and learning new skills.
In conclusion, staying in your lane of expertise is an important concept for entrepreneurs to consider. By focusing on the areas where you have the most knowledge and experience, you can maximize your chances of success, capitalize on your existing skills and connections, and reduce the risk of making poor decisions.
Concept 9: Stay Open-Minded In Business
However, it is also important to stay open-minded in business. By looking at opportunities outside of your traditional “lane,” you can uncover new opportunities and develop skills that may be beneficial in the future. For example, in the podcast, the speaker talks about a concrete company that was sitting on 26 acres but only using the first 5 or 6 acres for their buildings. After learning that the back half had been used for years to bury bad concrete products. He realized that there was potential in the remaining land and thought about grinding down the concrete and selling it as gravel. This is an example of how staying open-minded can lead to new opportunities.
Similarly, by staying open-minded, you may be able to find businesses in different industries that have similar clientele, sources, and labor forces. This can help you to identify potential synergies and capitalize on them.
Ultimately, staying in your lane is important, but it is also important to stay open-minded in business. By looking at opportunities outside of your traditional lane, you can uncover new opportunities and develop skills that may be beneficial in the future. By staying open-minded and looking at the bigger picture, you can maximize your chances of success and turn your business into a success.
Concept 10: Now Is A Great Time To Buy/Sell
Now is a great time to buy or sell a business. There are many reasons why this is the case, but the most important is that the current economic climate is conducive to making deals. In addition, there are many resources available to help individuals and businesses make the most of their opportunities.
One of the most important reasons why now is a great time to buy or sell is that the current economic climate is conducive to making deals. Businesses are looking for ways to expand their operations and increase their profits. This means that there are plenty of opportunities for buyers and sellers to come to an agreement. Furthermore, businesses are also looking for ways to reduce their costs and increase their efficiency. This means that businesses are open to negotiating with potential buyers and sellers in order to come to an agreement that works for both parties.
In addition, there are many resources available to help individuals and businesses make the most of their opportunities. For example, Marty Fahncke, a business advisor, was recently interviewed on a podcast. During the podcast, he discussed how important it is to have an attorney and a forensic CPA on board when negotiating with the IRS. He also discussed how he was able to negotiate a better settlement with the IRS and many of the vendors that the business owed money to. This is just one example of how having the right resources can help individuals and businesses make the most of their opportunities.
Ultimately, now is a great time to buy or sell a business. With the current economic climate being conducive to making deals and the availability of resources to help individuals and businesses make the most of their opportunities, now is the perfect time to take advantage of these opportunities. By staying open-minded and looking at the bigger picture, individuals and businesses can maximize their chances of success and turn their business into a success.
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