11 Things We Can Learn About Vision, Stories, and People in M&A from the How2Exit Interview of Andrew Pierno. Watch Here: E14
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: Buy Small, Reasonable Deals
Buying and selling a business can be a daunting process, especially for small and medium-sized businesses. It is important to understand the risks and rewards associated with such a venture. One strategy that has been gaining traction in recent years is the idea of buying small, reasonable deals. This strategy involves buying businesses that have a low risk of failure, but that still have the potential for growth.
Andrew Pierno, a business owner and industry leader, is an advocate for this approach. He got his start in the venture studio business, building software companies with a small fund of one to three million dollars. After several years, he sold the assets off, though it wasn't a great exit. This experience informed his approach to buying software businesses today.
Rather than experimenting with a venture studio, which can take between one and three years, Pierno's strategy is to buy something that is already working to some extent and then see if it can be grown. He and his partners look for businesses that have been in operation for at least five years, show a profit, and have some systemization around them. This strategy has worked out well for the five acquisitions they have made so far.
Buying small, reasonable deals is a viable strategy for businesses looking to acquire or merge with another company. It offers the potential for growth while minimizing the risk of failure. It is important to remember, however, that it is still important to do due diligence and research the company before making a purchase. With the right approach, buying small, reasonable deals can be a smart way to enter the world of small to medium-business acquisitions and mergers.
Concept 2: Off-Market Deals Can Be Lucrative
One of the most profitable strategies for businesses looking to acquire or merge with another company is to look for off-market deals. Off-market deals are those that are not publicly advertised but are instead found through contacts or networks. These deals can be extremely lucrative as they are often discounted or undervalued. They can also be a great way to get a foot in the door of a new market or industry.
The key to success with off-market deals is to do your research and due diligence. It is important to understand the company you are looking to acquire or merge with and to make sure it is a good fit for your business. It is also important to understand the market and the industry you are entering. This will help you to identify potential opportunities for growth and to understand the risks associated with the purchase.
In addition to researching the company, it is important to look for deals that are realistic and achievable. As mentioned before, it is important to look for deals that are discounted or undervalued. These deals can offer great potential for growth, but it is important to understand the risks associated with them. It is also important to look for deals that are within your budget, as it is easy to get carried away with the potential of a deal.
Off-market deals can be a great way to enter the world of small to medium-business acquisitions and mergers. By doing your research and due diligence, you can find deals that are discounted or undervalued, and that offer great potential for growth. With the right approach, off-market deals can be a smart and lucrative way to enter the world of business acquisitions and mergers.
Concept 3: Relationships Are Key In M&A
However, one of the most important aspects of successful M&A is the relationships between buyers and sellers. It is essential for both parties to have a good relationship in order for the deal to go through smoothly. A buyer needs to be able to trust the seller and vice versa. If there is a lack of trust between the two parties, it is likely that the deal will not go through.
Relationships are key in M&A because they are the foundation of successful deals. A buyer needs to be able to trust the seller and be confident that their money is going to a good cause. A seller needs to be able to trust the buyer and be sure that they will be taken care of after the deal is done. Both parties need to be able to communicate openly and honestly with each other in order to ensure that the deal is mutually beneficial.
Having a good relationship between the buyer and seller is also important when it comes to post-acquisition support. A buyer needs to be able to trust that the seller will be there for them after the deal is done. This is especially important for micro-acquisitions, where the buyer may not have the resources to provide post-acquisition support. The seller needs to be able to trust that the buyer will be there for them after the deal is done, and that their business will continue to grow and be successful.
In conclusion, relationships are key in M&A. A good relationship between the buyer and seller is essential for successful deals and post-acquisition support. It is important for both parties to be able to trust each other and communicate openly and honestly in order to ensure that the deal is mutually beneficial. With the right approach, off-market deals can be a smart and lucrative way to enter the world of business acquisitions and mergers.
Concept 4: Pick The Right Partners
However, the most important advice to consider before entering any M&A deal is to pick the right partners. As we heard in the podcast, the wrong team members can be disastrous and cost you time, money and potential deals. It is essential to pick partners who you can trust and rely on, who share your values and vision, and who are willing to work with you to make the deal a success.
The key to finding the right partners is to do your research. Take the time to get to know potential partners, understand their motivations, and find out what makes them tick. This will help you to build a strong relationship with them and ensure that you are both on the same page when it comes to the deal.
By taking the time to pick the right partners, you can ensure that your M&A deal is successful and profitable for everyone involved. Don't rush into a deal without doing your due diligence and making sure that the partners you choose are the right fit for you and your business.
Concept 5: Believe In Your Story
Believing in your story is an important part of any successful M&A deal. You need to have a story that resonates with your potential partners and investors. Your story should be something that they can believe in and be excited about. It should be something that they can get behind and support.
In the world of venture capital, stories can be even more important than technology. It's not just about having the right technology, but also having the right story. A believable story that people want to get behind and help you try to accomplish is what will really make a difference.
WeWork is a great example of how a good story works in the venture capital space. It's not just about having the best technology, but also having a story that resonates with people. It's about building a real business outside of Ventureland and inside of Ventureland.
Elizabeth Holmes is another example of how powerful a story can be. Even though her story ended up being false, it still illustrates how important a story can be in the venture capital world. People were captivated by her story and it was the thing that kept them invested in her company.
Believing in your story is an important part of any successful M&A deal. You need to have a story that resonates with your potential partners and investors. It should be something that they can believe in and be excited about. It should be something that they can get behind and support. No matter what industry you're in, having a good story is essential for success.
Concept 6: Don't Fake It Until You Make It
Unfortunately, there are times when people may try to “fake it until they make it”. This means that they may try to present a story that is not entirely true in order to get the attention and support of potential partners and investors. This is a dangerous practice that can lead to serious consequences.
One example of this is the story of an online dating service. The creator of the service tried to create an algorithm that would help people keep their profiles honest. The problem was that nobody wanted to be honest on their dating profiles. So, the creator tried to “fake it until they make it” by creating fake profiles and sending out fake flirts. This practice would have been the death of the company if they had been caught.
The lesson to be learned here is that you should never try to “fake it until you make it”. It is important to be honest and upfront about your story. If you try to present something that is not true, it could lead to serious consequences. It is better to be honest and open about your story and let potential partners and investors decide if they want to get involved.
In the end, it is important to remember that you should never try to “fake it until you make it”. It is important to be honest and upfront about your story and let potential partners and investors decide if they want to get involved. Honesty is the best policy and it is the only way to ensure that you have a successful M&A deal.
Concept 7: Monetize Monthly Usage
Monetizing monthly usage is a popular method of generating revenue for businesses. This method is especially popular among software-as-a-service (SaaS) companies. Monetizing monthly usage involves collecting a fee for each customer who uses the product or service for a certain period of time. This allows the business to generate a steady stream of income that can be used to fund further development and growth.
The key to successful monetization is to ensure that the customers are getting value from the product or service. This means that the product or service must be designed to meet the needs of the customer and provide a positive experience. Additionally, the pricing must be competitive and the customer must be able to easily understand the value they are getting from the product or service.
In the podcast, the speaker discusses how many people have tried to reinvent Craigslist and how this is a myth in business. He then goes on to discuss the criteria he uses when looking to buy a software-as-a-service business. He states that he is looking for businesses that have 80 percent gross margins or higher and are B2B software. He also states that he is looking for businesses that are profitable, have a team in place, and have been in business for at least five years.
The speaker then goes on to discuss his exit strategy. He states that he does not have an exit strategy and is instead focusing on buying, profiting, scaling, and then holding on to the business as a revenue-generating tool. He explains that he wants to use his own capital to learn before taking outside money and scaling up.
In conclusion, monetizing monthly usage is a popular method for generating revenue for businesses. It is important to ensure that the product or service is designed to meet the needs of the customer and provide a positive experience. Additionally, it is important to understand what criteria the business is looking for when buying a software-as-a-service business. Finally, it is important to have an exit strategy in place before starting any business venture.
Concept 8: Understand Key Metrics
When it comes to an understanding key metrics for businesses, it is essential to understand the terms SDE, EBITDA, P&L, lifetime value, churn rate, growth rate, total number of subscribers, conversion rates, and product market fit. These metrics are important for any business, whether it is a brick and mortar business or a software-as-a-service business. Understanding these metrics will help the business owner determine the success of their business and the potential for growth.
The SDE (Seller’s Discretionary Earnings) metric is a measure of the overall profitability of a business. This metric takes into account all of the expenses related to running a business, such as rent, employee salaries, and other operating costs. It also takes into account the profits generated by the business. This metric is important to understand as it helps the business owner determine the true profitability of the business.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is another metric that is important to understand. This metric is used to determine the cash flow of a business. It takes into account the costs associated with running the business, such as rent, employee salaries, and other operating costs. It also takes into account the profits generated by the business. This metric is important to understand as it helps the business owner determine the true cash flow of the business.
The P&L (Profit and Loss) metric is used to measure the overall profitability of a business. This metric takes into account all of the costs associated with running the business, such as rent, employee salaries, and other operating costs. It also takes into account the profits generated by the business. This metric is important to understand as it helps the business owner determine the true profitability of the business.
The lifetime value metric is used to measure the total amount of money that a customer is expected to spend on a product or service over the course of their relationship with the business. This metric is important to understand as it helps the business owner determine the potential for customer loyalty and repeat purchases.
The churn rate metric is used to measure the percentage of customers that are leaving the business. This metric is important to understand as it helps the business owner determine the potential for customer loyalty and repeat purchases.
The growth rate metric is used to measure the rate at which a business is growing. This metric is important to understand as it helps the business owner rmake informed decisions about their business. As such, it is important to understand the tech stack of the business. Knowing the tech stack of a business can help the business owner make informed decisions about the products and services they offer, the technology they use, and the way they develop their products.
Concept 9: Know Your Tech Stack
When it comes to technology, it is important to understand the different types of tech stacks and how they can be used. A tech stack is a combination of programming languages, frameworks, and databases that are used to build applications. It is important to understand the different types of tech stacks and how they can be used in order to make informed decisions about the products and services you offer.
When it comes to buying a business, it is important to understand the tech stack that the business is using. If the tech stack is unfamiliar to you, it can be difficult to assess the quality of the code and the potential problems that may arise. It is important to have someone on your team who is knowledgeable about the tech stack in order to ensure that the code is of a high quality and that any potential problems are identified and addressed.
It is also important to be aware of the cost of developing a product in a particular tech stack. Different tech stacks may require different levels of expertise and cost more or less to develop. It is important to understand the cost of developing a product in a particular tech stack in order to make informed decisions about the budget and resources available.
Finally, it is important to understand the different types of tech stacks and how they can be used in order to make informed decisions about the products and services you offer. Knowing the different types of tech stacks and how they can be used can help you make informed decisions about the products and services you offer and the technology you use.
In conclusion, it is important to understand the tech stack of a business in order to make informed decisions about the products and services you offer. Knowing the different types of tech stacks and how they can be used can help you make informed decisions about the budget and resources available. Understanding the cost of developing a product in a particular tech stack can also help you make informed decisions about the budget and resources available. Finally, having someone on your team who is knowledgeable about the tech stack can help ensure that the code is of a high quality and that any potential problems are identified and addressed.
Concept 10: Take Risks and Try It
Taking risks and trying it is a key factor in success, especially in the tech world. As Andrew Piernow, CTO of a computer vision and machine learning company, explains, it is important to be aware of potential disruptions in the industry and to be prepared to adapt to them. He advises against investing in businesses that could be disrupted before you have the chance to sell them. He also suggests that AI technologies could be used to make software engineers more productive, but that the last 80% of the process is often the most difficult.
In order to take risks and try it, it is important to have a good understanding of the tech stack you are working with. Knowing the different types of tech stacks and how they can be used can help you make informed decisions about the budget and resources available. Understanding the cost of developing a product in a particular tech stack can also help you make informed decisions about the budget and resources available. Finally, having someone on your team who is knowledgeable about the tech stack can help ensure that the code is of a high quality and that any potential problems are identified and addressed.
At the end of the day, taking risks and trying it is essential for success in any industry, but especially in the tech world. It is important to be aware of potential disruptions and to be prepared to adapt to them. It is also important to have a good understanding of the tech stack you are working with and to have someone on your team who is knowledgeable about the tech stack. With these steps in mind, you can be sure to maximize your chances of success.
Concept 11: Take Action and Get Results
Andrew Freno, a tech entrepreneur, made an appearance on a podcast to discuss the importance of taking action and getting results. He emphasizes the importance of taking risks and trying something new, even if it means starting small. He encourages people to start with small deals to get their feet wet, and to be aware of the fact that they are buying a job. He warns listeners not to expect quick success, as it will take time to get to the point where they can buy real cash flow.
Freno also shares his own experience of trying to monetize a plugin for Chrome. He explains that he wasted more money trying to monetize it than he paid for the company. However, the experience was not a total loss as he learned a lot from the experience.
The key takeaway from Freno’s experience is that taking action and getting results is essential for success. It is important to be aware of potential disruptions and to be prepared to adapt to them. It is also important to have a good understanding of the tech stack you are working with and to have someone on your team who is knowledgeable about the tech stack. With these steps in mind, you can be sure to maximize your chances of success.
Freno also encourages people to join The Investors and Entrepreneurs Professional Mastermind. It is a peer-to-peer mastermind which combines traditional peer-to-peer mentorship with accountability partnering. This platform is designed to help people set goals, take actions and get results.
In conclusion, taking action and getting results is essential for success in any industry, but especially in the tech world. It is important to be aware of potential disruptions and to be prepared to adapt to them. It is also important to have a good understanding of the tech stack you are working with and to have someone on your team who is knowledgeable about the tech stack. Joining The Investors and Entrepreneurs Professional Mastermind can also be a great way to get the support and guidance you need to reach your goals. With these steps in mind, you can be sure to maximize your chances of success.
---- MORE COOL STUFF ---
For investors passionate about business acquisition and anyone interested in buying a company to strategically expand, selling/exiting, or driving up your valuation, the new Acquisition Aficionado Magazine is a must-have resource. As a reader of How2Exit, you can click here to get a complimentary copy of Issue 4 featuring content from Ronald Skelton and many other M&A pros.
Are you ready to take your podcast listening to the next level? Subscribe to "DEEPER by How2Exit" newsletter and never miss out on our latest episodes. Join our newsletter HERE
Want to stay in touch with what's happening in the Main Street M&A Space? Subscribe to The Hub - Acquisitions Hub
