Buying a High 7 Figure Business with a Buy-Side Advisor

o you know how much it costs to work with a buy-side advisor?

The firm will run (almost) your entire acquisition for you.

The sourcing, the due diligence, the transaction.

They hold your hand throughout the whole process.

Can you guess the cost?

Answer: $250,000 - $300,000

At least that what's Jason Andrews paid. North of $250k.

...And what does he say about that cost?

Worth. every. penny.

"Would I do it again? Without question." - Jason

First, what did he buy?

‍Jason acquired a group purchasing organization (GPO), which helps healthcare providers — hospitals, medical offices, nursing homes — acquire supplies at bulk rates.

Great sticky, recurring revenue business.

The price was high 7 figures. (Closer to $10m than $5m.)

Jason didn't aim to buy such a large business; he was actually expecting much smaller.

But when the buy-side advisor presented him with this opportunity, he jumped.

And by "jumped", I mean Jason put all his chips on the table.

He had to max out the SBA loan, negotiate a large seller note, and add "pretty much every dollar I had that wasn't in a 401k — all in."

(And BTW, he's 42 years old with a family and a mortgage at this time.)

This was 6 years ago.

How did it go? Read on...

So what did he get for $250k?

‍The buy-side advisor was The DVS Group of Kansas City.

"They truly held my hand through the process," says Jason.

A big piece of that was the sourcing.

He provided his criteria, like being within 45 miles of Kansas City, and they built a list and mailed the targets.

‍(Mailed, not emailed. Physical letters to the businesses.)

They charge a hefty fee for this, around $2,000/mo.

"Most of that was just to make sure you're serious," recounts Jason. "They said, 'Well 85% of the people that sit here, won't go through with it.'"

Apparently Jason was in the 15%.

The sourcing took 10 months.

DVS generated about 30 responses, responses warm enough for Jason to physically meet with almost all of them.

Once Jason decided to go for GroupSource, they shifted their resources to closing the deal.

They ran the due diligence room and helped him find a lender.

He closed 100-110 days after finding GroupSource.

Also, key point:

‍Jason was working full time during the entire process.

‍So sure, $2,000/mo is a lot. But it allowed Jason to keep his day job.

I've never spoken with a searcher who's made as large an acquisition as Jason without devoting full time to the process.

And how's it going?

‍"I don't think anything about it now," says Jason of the $250k.

"It was an absolutely significant fee, and one that I can't remember because it was really immaterial in the grand scheme of things."

He even suspects he paid a premium for the business.

But again, worth it.

The low multiples in small business acquisition, combined with the low-cost leverage of an SBA loan, just make the economics so good.

Contrast that with real estate investing.

"I don't feel like it's a situation where you make all your money when you buy it. You know, like a rental house. Some people say you make all your money when you buy it."

Not here.

"It's like, you find a 'good enough'. Something you can wrap your head around and the people are right, and go."

"That's what I did, and it's the best decision that I made."

GroupSource cash flows per employee what most small businesses generate in revenue per employee.

Annual growth is in the mid-teens.

It throws off enough cash that Jason has paid down the SBA note ahead of schedule.

Most telling of all?

Jason sees getting his own weekly hours in the business down to 15, and going out and buying another.

Listen to Jason's full story on YouTube 👇

If you want to get in touch with Jason, LinkedIn & Twitter are best.

Now, I'd love to hear from you.

Did you use or have you considered using a buy-side advisor?

Write back and let me know your story.

Until next week,

Will

Sponsors

August Felker is a 2-time successful searcher — first with a traditional search fund; the second time around, he did a self-funded search.

Today August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you.

If you've got a business under LOI, Oberle will provide complimentary due diligence on that business's insurance and benefits program. A great, no-risk way to get to know August & team.

They love helping searchers; they've worked with hundreds. Oberle is a specialty insurance brokerage for searchers, by a former searcher.

Check out the Search Fund Team at Oberle.