⛰️ Pre-acquisition FAQs
What type of business does Acquira have the most experience in?
As of 2021 the majority of our experience lies in home services businesses. Industries such as
- HVAC
- Plumbing
- Roofing
- Water/fire damage restoration
- Landscaping
- Pool installation and maintanance
- Garage door installation
- Electrical
- Kitchen and Counter
- And more home service related industries
We have done many deals and not once was there an emergency. There is no such thing in these transactions.
We understand that a lot of this will be new to you, and it is a significant sum of money that you will be deploying. Please do not get pressured by brokers, sellers, lawyers, bankers, or lenders to give an answer on a dime. If anything, it should serve as a red flag and a potential deal killer during your deal search phase.
The vendors we refer you to throughout the process are experienced M&A partners of ours. Whether it's legal, diligence, operations, marketing, etc, each knows how we structure and proceed with deals and are aligned with our best practices.
You can always open a ticket or send us an email with questions as that's what we are here for. We are here to guide and advise. We will provide guidance and resolutions as needed and tend to answer within 24-48 hours.
We recommend you check out our comprehensive article on the Best Business Sectors To Buy.
How much cash in total do I need to have in order to do a deal?
Here is a breakdown of the typical capital requirements. Please note that these can vary depending on the specifics of the business. If you add these costs together, you will find that a safe number is ~$150,000 in liquid cash or more.
You should plan to put at least 10% cash down on the business. We recommend businesses earning at least $500k/year in SDE and multiples are usually between 2x and 3x. This means a minimum purchase price of $1mm to $1.5mm, which means a cash downpayment of $100,000 to $150,000.
Reserves
If you are using SBA, they may want to see $20k-$30k left in reserves post-close.
What are costs I need to plan for from LOI to close?
As always, the caveat is that these costs can fluctuate depending on the specifics of the deal. But in general, you can expect to incur these expenses from LOI to close:
- ~$10,000 for a Quality of Earnings report
- ~$15,000 in legal costs
- ~$2,000 for a site visit (travel, lodging, meals)
- ~$5,000 in potential out of pocket costs related to SBA financing
- $200-$500 for entity creation
- $1,000 miscellaneous/unexpected costs
Once again, these are costs paid directly to our vetted vendors, not to Acquira.
Can I buy a business if I’m in a country outside of the United States?
Yes, but you must be willing to move to the United States and spend 50%-100% of your time on the business for at least 6 months post-acquisition. Of course, the constant disclaimer here is that it always depends on the specifics of the business. It’s also important to note that if you plan to acquire a business with SBA financing, you must be a US citizen or a permanent resident of the US.
Do I need to quit my job to work on an acquisition?
Your workload during Phase 1 has been designed to be easily taken on while still holding a 9-5 job. This phase can last between 6 and 9 months. During the first few months of Phase 2, it is recommended that you take some time off or work remotely, as at least 30 hours of work per week are needed. If that's not possible, then quitting your job and dedicating yourself to the new business is what we recommend, and we would need to make sure your needed income in covered by the business.
I am really worried that I will acquire a lemon and that it will tank quickly
Our diligence process and tools that we provide aim to eliminate any guesswork in the deal search process and ensure you are aware of all the risks and potential threats within each business that you look at. These frameworks have been built from our experience analyzing hundreds of businesses over many years. It’s also important to understand that the businesses we acquire have been around for decades with an established staff and client base. It’s next to impossible for these types of businesses to tank overnight.
How exactly do we connect with Acquira’s vendors throughout the acquisition process?
Acquira will put you directly in touch with our vetted vendors when appropriate at every stage of the acquisitions process. These include vendors for legal, financial diligence, growth plans, lending, and more.
For example, once you have found a business and decide to issue an LOI to the seller, we will put you in touch with one of our transactional attorneys who will work with you to revise our standard LOI as needed.
You will pay these vendors directly – Acquira does not earn here. The costs of our vendors have been negotiated down based on scale and they are very familiar with our goals and how we operate. This means you will be spending much less time and money than if you were to work with vendors outside of our ecosystem.
Are you open to working with partnerships?
Yes, we work with pairs of Acquisition Entrepreneurs all the time. Approaching an acquisition with another partner can be a great way to share the financial and time commitment required.
Also, If your partner is also going to be heavily involved in the operations of the business, we would prefer that they go through our Acceleration Gauntlet so that we can get to know them and start building trust and rapport.
Will Acquira invest in my business?
We are interested in making investments in businesses that we feel we are able to add a lot of value to. Typically that means we are confident our involvement will a) double the value of the business and b) provide an exit path. The terms of that investment are always on a case-by-case basis, after the deal is closed.
🚀 Post-acquisition FAQs
How much time will I need to spend on the business after I buy it?
You should have the flexibility to spend 75%+ of your time on-site working on the business with your general manager during the first 3-6 months post-acquisition. Assuming everything goes as planned, you can aim to taper off that involvement with the ultimate goal of being more passive 12 months post-acquisition.
What can Acquira do for my business post-acquisition?
Post acquisition, our team can provide training, systems, resources, and coaching as you and your GM operate the business. This may be as part of the terms of our investment, or it may be done as a paid service. We also provide our ACE Framework at an additional cost to any buyers who wish to implement the framework. ACE is a requirement for any deals that use our equity fund. We will also introduce you to third party vendors that we have vetted that the business will pay (for example, contractors to accomplish digital marketing initiatives, and more).
What does our relationship look like longer term (after 12 months post acquisition)?
Our goal is to start working on another acquisition with you 12 months after the first acquisition and continue building your portfolio from there. Our team is also continually developing new systems and training from information we glean from our other acquisitions. We'll continue to roll these resources out to you as we create them.
🏢 FAQs about Acquira
What is Acquira’s end goal? What are you ultimately trying to build?
We’re glad you asked! Here’s an article that breaks down our business’s flywheel in depth and clearly explains the consistent steps we are taking to build our company.
Who is on the Acquira team?
Glad you asked! Check out our team page here. Keep in mind there are over a dozen folks not yet represented. Make sure to click into our in depth and transparent bios.
Have any of your businesses failed?
No. As of December 2020 we will have closed 6 businesses with other Acquisition Entrepreneurs under this model. None of these businesses have failed. The business that is furthest along in our process is over a year post-acquisition and you can see a case study on that business here.
Besides the 6 businesses we have acquired so far with Acquisition Entrepreneurs, there are another 17 that we have acquired since 2015. The vast majority of these have done well. Those that haven't were the result of learning curves and they were some of our earlier acquisitions. It's these past mistakes that gave us the experience to work with people now, so we are grateful for them.
Why doesn’t Acquira buy online businesses?
Although Acquira’s background is in digital acquisitions and we own a portfolio of websites, we don’t currently pursue online acquisitions with other acquisition entrepreneurs. The details on this have been outlined in this article.
How are you able to provide your services to multiple Acquisition Entrepreneur/businesses at the same time? Are you promising more than you can deliver?
It's important to understand that Acquira is not an operations company, we are a systems and training company. This means we don't have to duplicate ourselves for every deal we do with you. Our superpower is identifying business best practices, turning them into fireproof systems, and training people how to implement them. This could be training you, training your general manager, or training a third party service provider that the business pays.
We give you the shoes, you do the legwork.
How does Acquira make money?
Acquira makes money in the following ways:
- Paid training
- Paid consulting
- Our own portfolio of businesses that provide us cashflow
- Distributions from partner businesses
- Whenever one of the Acquisition Entrepreneurs we’ve partnered with decides to distribute cash from their business, we receive a percentage of that distribution proportionate to our ownership in the deal (up to 30%)
- Liquidity events in our partner businesses
- Usually exits, sometimes an ESOP or a public listing.
What is the difference between Acquira and the Search Fund model?
With the Search Fund model you are typically looking for larger businesses ($30mm+). Acquira targets smaller businesses in the $1.5mm-$5mm range.
The Search Fund model also usually means you are raising a lot of money from investors, quitting your job and searching for a deal full time. Once you close on a deal, because of the money you have raised you might get 20-30% equity in the business. Acquira's search process does not require you to quit your full time job, and when you do a deal with us you own it outright. Our decision to invest is done after the deal, mutually agreed upon, and typically has us coming in as a minority partner.
Can I talk to Acquisition Entrepreneurs you have worked with?
While we appreciate the question, we try our best to protect our Acquisition Entrepreneur’s time and instead we prefer to capture their experience in an interview so we can share it at scale.
Here is one interview you should make sure to watch: https://youtu.be/HC9PZZJ8HTk
This is also a call recording of a couple of our AEs talking to Quinn Huffman on our leadership team: https://youtu.be/GwYq8ges4r8 Quinn served as the interim GM at a plumbing company we’ve acquired, so he can speak to his experience “in the trenches” and provide great insight into the post-acquisition process.
If you still want to talk to one of our AE’s in person, we are more inclined to arrange this after you have brought a deal to an Investment Committee.
Why doesn’t Acquira just continue to buy businesses themselves? Why work with other Acquisition Entrepreneurs if the opportunity is so amazing?
We’ve acquired over a dozen wholly owned and operated businesses. During the course of this we realized 3 things:
- That we were really good at the acquisition process and also thoroughly enjoyed creating training and systems for our vendors, contractors, and general managers on how to purchase, systematize and grow our businesses.
- We realized that there was more opportunity out there than we knew how to take on ourselves (especially with the mega trend of baby boomers retiring), and we wanted to continue to acquire small businesses in scalable win-win way.
- We noticed that there were entrepreneurs who were beginning to see the benefits of acquiring businesses instead of starting them, and we love helping people create their own freedom.
The above 3 points caused us to create the Acquira business model. By working with majority owner operators like yourself to acquire businesses, we can deploy our experience and capital in a scalable way. By working with a strategic partner like Acquira, you can walk into a 7-figure acquisition with confidence. Win-win.
📚 FAQ about our programs
I already have a deal I’m looking at and I need to take action sooner than later, do I need to go through your whole process before I can discuss this deal with you?
No! If you’re already looking at a deal, please email [email protected] so we can expedite you through our process. We’ll want to analyze the deal with you ASAP.
What is the purpose of the Gauntlet?
The gauntlet accomplishes a few things:
- It helps you determine if acquiring a business is the right move for you.
- It helps us understand how you work and think so we can judge whether or not we might be a good fit to acquire a business together.
- It allows you to understand our expertise more and also get to know us as people.
What does the Gauntlet training include?
The gauntlet is a set of daily exercises with video and written content to support those exercises. In addition to exercises related to learning more about you and helping you define your investment thesis, we give you all the information on a deal we’ve already closed, and then we have you actually do the work of analyzing the business. You will also have a weekly call with someone on our team, and you are in a forum/community with other members of your cohort and our team.
How much of a time commitment is the Gauntlet?
You should reserve 1.5 to 2 hours per day to go through the gauntlet. The training is structured daily, but you have the freedom to choose when you do the work throughout the day.
What if I’m not ready to pursue an acquisition yet? Does it still make sense for me to go through the Gauntlet and take next steps with Acquira?
YES! Even if you don’t plan to seriously focus on an acquisition for a year, it still makes a lot of sense for you to go through the gauntlet for 3 reasons:
- The gauntlet will help you make clearer decisions as you get closer to pursuing an acquisition. The training is designed to get the gears turning in your head on what you want to buy, where you want to buy it, how you want to but it, and what the process will generally be like. The sooner you know these things the better.
- You can get resources upfront. Similar to the above point, the sooner you get involved in our ecosystem the sooner you can receive more information that will help you prepare.
- You can find out sooner than later if Acquira will be your strategic partner.
Do you ever pair Acquisition Entrepreneurs together within your organization?
As of November, 2021, no, we have not. However, we do have plans to create more opportunities for AEs to partner up within our ecosystem. For example, hosting regular mastermind groups where AE’s can get to know each other more, or partnering AE’s up who are looking to buy similar sized businesses in similar industries and locations.
As Acquira continues to grow, we will think about this more. We are creating a network of peers who have shared values and creating new partnerships is a natural consequence of that.
I’m already very experienced in business/finance/acquisitions, I don’t think the Gauntlet will teach me anything I don’t already know – can I skip it?
While a more experienced individual might find parts of the Gauntlet more straightforward, it’s still important for us to see your desire to lean into our ecosystem and process. One of our core values is Voracious Learning and we look for people who are humble enough to still be teachable even if they’ve had a lot of experience. We also look at it the other way in that we want experienced individuals in our ecosystem that can teach us.
At the very least, if the Gauntlet is overly rudimentary to you, then it still has a benefit in us getting to know you and you getting to know us.
It’s worth noting that we’ve had many very experienced individuals go through the gauntlet and find a lot of value in it.
🏦 SBA and financing FAQs
Who walks me through the lending process?
When appropriate (typically around the time you are submitting an LOI) we will connect you to our preferred lenders as well as our legal team. You will be directly in touch with them and we will be close by to provide guidance.
Will the SBA require my home as collateral?
SBA only takes your house as collateral if you have enough equity – the lender isn’t required to take collateral with real estate if the equity in that real estate is less than 25% of the property’s fair market value. But, then the lender has to document the source (basically what you owe on the house and how much equity you have through a home appraisal)
What if I have few to no personal assets to use as collateral for a loan?
Contrary to popular belief, a guarantor on an SBA loan does NOT necessarily need to have any personal assets to put up as collateral. If this is the case, on the borrower (your) side SBA will be looking at your credit score, liquidity, and your resume. They will also lean heavily on the cashflow and assets of the business to secure the loan.
How much of a time commitment is the Gauntlet?
You should reserve 1.5 to 2 hours per day to go through the gauntlet. The training is structured daily, but you have the freedom to choose when you do the work throughout the day.
What if I’m not ready to pursue an acquisition yet? Does it still make sense for me to go through the Gauntlet and take next steps with Acquira?
YES! Even if you don’t plan to seriously focus on an acquisition for a year, it still makes a lot of sense for you to go through the gauntlet for 3 reasons:
- The gauntlet will help you make clearer decisions as you get closer to pursuing an acquisition. The training is designed to get the gears turning in your head on what you want to buy, where you want to buy it, how you want to but it, and what the process will generally be like. The sooner you know these things the better.
- You can get resources upfront. Similar to the above point, the sooner you get involved in our ecosystem the sooner you can receive more information that will help you prepare.
- You can find out sooner than later if Acquira will be your strategic partner.
How involved in the business will the SBA want me to be in order to get a loan?
The SBA requires that the new owner be a principal in the business, so any mention of being passive is going to raise red flags. It’s not to say that you can’t hire a GM, but SBA wants to know that the person they are lending 7-figures to is going to be significantly involved in the business.
How much do you have to have in reserves after the downpayment?
The SBA will want to see around $20-30k left in cash reserves after your downpayment.
💁 Helpful Links (more videos & case studies)
| Resource | Description | Link |
|---|---|---|
| Investment Committee Call | These call recordings will help you understand how Acquira’s team analyzes a deal alongside you. The IC call happens during Phase 1 (The Acceleration Program)and it is one of the final steps you take before you submit a LOI on a deal. | Adam: https://youtu.be/RCwfIINE0TUJon: https://youtu.be/nycUADr07iE |
| Acceleration Program Call With Acquira’s Legal Team | Get a peak into the weekly calls we host during Phase 1 (The Acceleration Program) with our team, vendors, and other acquisition entrepreneurs. These calls keep you sharp, hold you accountable, inspire you, and provide clarity during your acquisition. | https://youtu.be/Dd8f5qCOlhI |
| Acceleration Program Call With Acquira’s Diligence Team | Get a peak into the weekly calls we host during Phase 1 (The Acceleration Program) with our team, vendors, and other acquisition entrepreneurs. These calls keep you sharp, hold you accountable, inspire you, and provide clarity during your acquisition. | https://youtu.be/vDR-fqFfLqY |
| Case Study: Growing a plumbing company acquisition | How Acquira combined digital marketing and effective management to grow a new plumbing company acquisition in the first 3 months | https://acquira.com/how-acquira-grew-new-plumbing-company-acquisition-in-the-first-3-months/ |
| Deal sourcing best practices | Best practices for sourcing on-market deals and getting on a broker’s Top 5 Buyers list | https://acquira.com/how-connecting-with-brokers-can-help-you-find-more-businesses/ |
| More on and off-market deal sourcing techniques | Building scrapers for business listing sites, analyzing digital marketing profiles, and more. | https://youtu.be/j8pjnFipOR8 |
| Entity selection, tax optimization & bill of sale | Insight into the less exciting but vitally important part of the acquisition process. Acquira provides structured guidance for all of this. | https://kylongienger.wistia.com/medias/zs3240hsne |
| 15 questions to ask before you buy a business | Helpful when you’re analyzing deals | https://acquira.com/15-questions-to-ask-when-buying-a-business/ |
| Case study: What the first 7 days at your newly acquired business should look like | You just bought a business, now what? | https://acquira.com/the-first-7-days-at-your-newly-acquired-business/ |
| Acquira’s blog | We publish new content like the above every week | https://acquira.com/blog/ |
