hilippe Vanderhoydonck had entrepreneurial aspirations early on.

During college he started reading TechCrunch and imagining the possibilities of tech entrepreneurship.

In this twenties he worked his way through a number of tech companies, first in sales, then in marketing.

He also started a number of side projects over the years, but none ever got traction.

Eventually he and a partner started a digital marketing agency, which seemed like a good fit for his sales & marketing skills.

Meanwhile, the idea of acquiring his way into entrepreneurship was in the back of his mind.

He had heard about people acquiring businesses as their path to running a business, and the concept appealed to him.

In 2018 he’d read Walker Deibel’s Buy Then Build, which lays out how to go down the path of acquisition entrepreneurship.

Buy Then Build cover

Toward the fall of 2020, Philippe was starting to realize that agency life wasn’t for him, and the prospect of acquiring a business was becoming more and more attractive.

In November, he made the decision.

He would go all-in on acquiring a business.

He handed the reins of the agency over to his business partner and ceased experimenting with his side projects.

It was time to find a business.

Zero to Close in 10 Weeks

Following the playbook outlined in Buy Then Build, Philippe clearly defined the criteria he was looking for in an acquisition target, including that he be able to run it remotely.

Software businesses fit the bill, so he started looking at those.

But while browsing a Dutch business listings site called Brookz, a media business caught his eye.

PETS International was a trade publication for professionals in the pet industry.

The owner was running it with her husband and a small team of freelancers.

They published a physical magazine 6 times a year and hosted 2 small annual executive events, one in Europe, the other in Asia.

“Generally with any business, if you’ve been in it for 30 years, you get into a flow and a system of how you do things, and that’s kind of it.”

Philippe saw tons of potential not just for the business itself, but for his particular skillset.

While PETS International did have a website and email list, it hadn’t embraced digital to the extent Philippe saw possible.

The bimonthly magazine generated 55-60% of the revenue, the 2 events generated 30%, and just 10-15% came from digital.

With his experience in digital marketing, and content in particular, he saw ample opportunity to expand the business online.

“Someone with fresh eyes, with the right background like me, can just come in and accelerate that process,” he says.

There was also the inertia that can develop when an owner runs a business over decades.

“Generally with any business, if you’ve been in it for 30 years, you get into a flow and a system of how you do things, and that’s kind of it.”

PETS International covers
PETS International publishes 6-7 physical issues per year

So while PETS International wasn’t a software business, it met many of Philippe’s criteria.

Could it be run virtually? Check.

Was the SDE within range? Check.

Could it be improved with Philippe’s particular skillset? Definitely.

And as a bonus, the business had the very attractive quality of being stable over a long period of time.

The business was over 30 years ago, older than Philippe himself.

PETS International seemed like a great fit, and he moved forward.

Joys of a Helpful Seller

Philippe’s first call with the owner went well, and things started moving quickly.

She saw Philippe’s potential to expand the business online, which she recognized needed to be the future of the business.

She had gone down the path with prospective buyers before, but none had been the right fit.

“You have to be kinda lucky to find a good deal where not only the business is good, but the owner has the right mindset and transparency, where they want to help you through the process,” he says.

So when Philippe came along and did seem like a fit, her records were already organized and prepared for his due diligence.

After that first call, they immediately entered a negotiation, which lasted 3 or 4 weeks.

Not only did she feel good about Philippe, he felt good about her.

“You have to be kinda lucky to find a good deal where not only the business is good, but the owner has the right mindset and transparency, where they want to help you through the process,” he says.

“It was clear that she was very open about everything. And whenever there was a question, she was very transparent in her answers. I quickly got the feeling that everything she was saying was accurate.”

Also, because revenue was distributed across a wide range of clients, customer concentration risk was minimal.

That saved Philippe the step of interviewing existing clients during due diligence.

PETS International - May 2021
PETS International May 2021 issue

The process was very smooth.

The trickiest part ended up being engaging an attorney and an accountant to work the deal.

Philippe did have a short list of lawyers & accountants, but he hadn’t formally hired any of them. So when the deal started moving quickly, he had to scramble to actually get a lawyer and an account enlisted in the process.

Start to finish, the deal took 10 weeks from that first call.

“All of a sudden it’s like, ‘Oh yeah, we need to close this deal as fast as possible. And then you start calling everyone trying to find people who are available right away, because that's pretty rare,” he says.

“So it was kind of a stressful time trying to find someone fast.”

That hiccup didn’t slow things too much, fortunately.

It was still a fast deal.

Philippe’s first phone call with the owner was around the Christmas holiday season, and he closed on the business on March 1st.

Start to finish, the deal took 10 weeks from that first call.

60% Up Front, 40% on Future Performance

PETS International was doing revenues in the low seven figures, with margins ranging between 20 and 35 percent.

The selling price was also in the low seven figures, roughly a 3x multiple on earnings.

Philippe paid 60% up front with the remaining 40% due over time based on when the next 3 events occur.

This meant COVID could extend when the loan is due, as the events may not occur according to their usual schedule in 2021 and 2022.

There is nothing like the SBA in the Netherlands where Philippe is based, so he had to cobble together financing for the 60% from his network.

“Financing here is a little bit tricky for sure.”

GlobalPETS Forum
GlobalPETS Forum, the bi-annual event by PETS International

No Hidden Bodies

Happily, Philippe’s instincts about the previous owner’s honesty have thus far proven accurate.

After the first few months under his ownership, he says, “I’m feeling good. No hidden bodies. Everything lined up with my expectations.”

He’s of course working hard to learn every facet of the business he’s acquired.

And as is the case with trade publications, you’ve also got to learn the industry they cover.

So while Philippe studies his new business, he’s also studying the pet industry.

Fortunately, he’s found the industry to be welcoming, easygoing, and passionate.

“Every time I speak to someone in the industry, and they hear that I’m not originally from the industry, they’re like, ‘Just prepare yourself for a lifelong journey into the pet industry. You’re probably not going to get out anymore.’”

Little by little, Philippe is carving out space to work on the business rather than in it.

“As soon as I heard that buying a companies as a living was actually a thing, I envisioned owning multiple businesses.”

His first order of business is cosmetic upgrades, like a website redesign and overhaul of the email template.

Later, he’ll start layering in new online products to offer existing clients.

He also sees potential for PETS International’s events.

“Within the next year or the year after that, I will get someone on board to see how we can explore the events side of the business further,” he says.

“There is a lot more opportunity there as well.”

Speaking of bringing people on board, Philippe’s long-term goal is not to owner-operate PETS International himself, but to bring in an operator and shift his own role to that of owner-investor.

At which point he’d start looking for another acquisition.

“As soon as I heard that buying a companies as a living was actually a thing, I envisioned owning multiple businesses.”

Philippe's Advice to Acquisition Entrepreneurs

There are a number of lessons Philippe learned from his process of acquiring PETS International:

  1. It’s not just about the type of business you want, it’s also about your skillset. “Most of the people I’ve spoken to have this idea in mind of, ‘I want this specific type of business.’ Like, ‘I want an e-commerce business.’” But Philippe says they should focus instead on what can benefit from their particular skills, regardless the type of business. He points to his own case, where he almost overlooked PETS International because he was fixated on software businesses.
  2. Balance that with personal taste. It is important that you have some interest in the business you acquire. Philippe looked at buying a sewage cleaning company, but when he imagined going to work every morning in that business, the prospect didn’t quite smell right. So an acquisition should align with your skillset and interests.
  3. Have your deal team lined up in advance. “Finalizing your choice of, ‘OK this is the accountant I’m going to work with, and this is the lawyer I’m going to work with.’ For the next acquisition that’s definitely something I’m going to do,” he says. “It just saves you a lot of time and headache from finding someone at the last minute.”
  4. Be prepared for to search for months, even years. Philippe recognizes that he was very lucky to identify and acquire PETS International in under three months. This is the exception, not the rule. “It is hard to find something that really matches your criteria. You really need to be prepared to go into it for 6, 10, 12 months, maybe even 2 years,” he says. “I’ve spoken to people who have been looking for 3 years.”