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Tips and Articles for Entrepreneurs: Selling or Buying

The Common Investor: Seeking Revenue $5M-50M EBITDA $1-5M

I am approached daily by investors looking for opportunities. The problem is that all of the investors are competing for the exact same criteria:

I think I've determined that this common approach is founded from the advice in the Harvard Business Review Book: HBR Guide to Buying a Business and I wish there were more investors looking just outside of these criteria that would be willing to apply some creative approaches.

The Common Investor appears to be looking for the “Perfect Business” - one without risk that builds on the backs of those who took the risk and sacrificed their lives time and again many years ago. Here is what I usually see from the Common Investor:

Ownership Criteria: Owner seeking liquidity and/or exit – such as a retiring owner without a successor in place, an operator looking for a new role, or a serial entrepreneur ready for a new venture. Concentrated ownership

 Business Criteria:

·         Sustainable competitive position in a growing and/or niche industry

·         Past and clear future growth trajectory

·         Diverse and expanding customer base

·         Strong middle management team

Financial Criteria:

·         Revenue between $5M and $50M

·         Cash flow (or EBITDA) between $1M to $5M

·         Recurring revenue streams from loyal customers

·         Low ongoing capital expenditure needs

If you send me this criteria, please know that I have a dozen or more of these inquiries every month. If you have something a little more creative, please let me know. I like working with investors who are operating outside this box. I’ve seen a couple of investors who are innovating their level of participation in the business or they are willing to combined several smaller businesses in the same industry for an additive benefit.

Explore the boundaries of a Common Investor. If you’re willing to innovate, I’m willing to help you. I’m an entrepreneur. Entrepreneurs take risks, innovate, and reap the rewards. Join me, will you?

Kris FuehrComment