In this article, we will explore the journey of Patrick Dichter, owner of Appletree Business Services, as he shares his experiences and insights on acquiring and growing small businesses. Through a detailed analysis of his interview, we will delve into the key themes of his story, the lessons he has learned, and the implications for aspiring entrepreneurs.

Introduction: The Path to Acquisition

Patrick Dichter's journey into the world of mergers and acquisitions was not a linear one. With a background in sales and consulting, he discovered a gap in the market while working with small businesses. Many of his clients had poor bookkeeping practices, hindering their growth potential. This realization led him to consider acquiring an accounting firm instead of referring out the work. In 2021, he successfully acquired Appletree Business Services, a small business accounting firm, and has since made additional tuck-in acquisitions.

Theme 1: The Art of Acquisition

Dichter's first acquisition was not a straightforward process. He faced challenges in finding a suitable accounting firm to purchase, as many brokers were hesitant to work with him due to his lack of CPA credentials. Undeterred, he took matters into his own hands and conducted a cold email outreach campaign. This proactive approach eventually led him to connect with the seller of Appletree Business Services. The acquisition process took several months of negotiations and due diligence, but Dichter's persistence paid off.

"I ended up doing my own cold email outreach and created my own campaign... So my first email to Steve, the seller, was probably in September, and we closed December 31. So four or five months of talking and negotiations and getting pretty fast." - Patrick Dichter

Lesson Learned: Don't be afraid to take the initiative and think outside the box when it comes to finding acquisition opportunities. Brokers may not always be the best route, and direct outreach can yield promising results.

Theme 2: The Size of the Prize

One common misconception in the world of acquisitions is the notion that bigger is always better. Many advisors and experts advise against acquiring small businesses, citing the need for larger deals to generate substantial returns. However, Dichter challenges this notion and emphasizes the potential for growth in smaller acquisitions. He recognized the opportunity to acquire smaller accounting firms that were not typically on the radar of private equity firms or larger buyers.

"I was betting on the fact that I'd be able to grow it... Most of the accounting firms that are 600, 700, a million of SDE or even EBITDA, they don't sell because they're great businesses. Or if they do sell, they're selling to PE for six to eight times and you'll never be able to compete." - Patrick Dichter

Lesson Learned: Don't overlook the potential of smaller acquisitions. By focusing on niche markets and leveraging your expertise, you can grow these businesses and achieve significant returns.

Theme 3: Integration Challenges

While acquisitions offer tremendous growth opportunities, the process of integration can be challenging. Dichter experienced the difficulties firsthand as he integrated the accounting firms he acquired into Appletree Business Services. Each acquisition brought its own set of complexities, from different tech stacks to varying client bases. Dichter acknowledges the importance of finding a bullseye fit in terms of compatibility to minimize integration challenges.

"Integration sucks... Having to onboard every single client again, get acquainted, build their trust... I have a little bit of PTSD on integration and acquisition." - Patrick Dichter

Lesson Learned: Integration requires careful planning and consideration. It is crucial to assess the compatibility of the acquired business and ensure that the integration process is as seamless as possible.

Theme 4: Organic Growth and Marketing

As Dichter solidifies his acquisitions, he shifts his focus to organic growth and marketing. He recognizes the value of inbound leads and has recently hired a salesperson to handle the influx of inquiries. By leveraging marketing strategies and inbound leads, Dichter aims to grow his client base and expand the reach of Appletree Business Services.

"We're really focused on a certain type of small business client and a certain type of engagement... We're growing well organically... We're in a mode of like, we made a lot of hires, we're getting them settled in, we made a lot of technology changes." - Patrick Dichter

Lesson Learned: Organic growth and marketing are essential for sustained success. By targeting specific client segments and delivering quality services, businesses can attract new customers and expand their reach.

Conclusion: The Future Outlook

Patrick Dichter's journey as an acquisition entrepreneur offers valuable insights for aspiring business owners. His experiences highlight the importance of taking initiative, considering smaller acquisitions, and navigating the challenges of integration. By focusing on organic growth and marketing, businesses can position themselves for long-term success. As Dichter continues to build and grow Appletree Business Services, he remains open to future acquisitions that align with his vision and goals.

The path to acquisition and growth is not without its obstacles, but with the right mindset, strategy, and execution, entrepreneurs can achieve remarkable results. Patrick Dichter's story serves as an inspiration for those embarking on their own entrepreneurial journey, reminding us that success lies in seizing opportunities, embracing challenges, and continuously learning and adapting along the way.

Contact Patrick on

Linkedin: https://www.linkedin.com/in/pdichter/

Website: https://www.appletreebusiness.com/

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