Insight
Smale: Selling a $20M business is fundamentally similar to a $1M deal
“And really the difference between selling a, Million dollar business and twenty million dollar business isn't really that different. It's slightly more technical. It takes a bit more time. It involves generally more attorneys and accountants and different thir…”
Insight
Smale: Buying a $10,000 Business Does Not Require Professional M&A Advice
“If you're buying something for 10,000 dollars, you don't need to hire a firm like us. You don't need professional advice.”
Insight
Smale: M&A broker fees start at 15% on small deals and scale down
“Fees generally on smaller transactions start at 15% and then tear down. So the bigger the business gets, the lower the fee you get to, and that really continues to tear up until you have a multi-billion dollar business. Fees will be even lower.”
Insight
Smale: Small businesses sell on profit multiples, not revenue
“For most small businesses, so probably everyone listening, you generally don't get a revenue multiple. There's a lot of misinformation out there around valuations, but revenue multiples are uncommon. You generally get a multiple of profit.”
Insight
Smale: Average small business sells for 4x to 10x annual profit
“Like the average small business is probably in the four to 10 times annual profit range.”
Insight
Smale: Buying Existing Businesses Eliminates Product and Willingness-to-Pay Risks
“But the variable you're never worrying about is, will someone pay for it? Because it already has an audience, and does the product work? Because again, it's already got people paying for it.”
Insight
Smale: Buyers Should Acquire Businesses Where Their Skills Complement the Founder
“Buy something where your skill set can add to it. You don't necessarily need to have the same skills as the founder. Ideally, you need to have slightly different skills.”
Assertion Contradicted
Smale: In 2010, no M&A firms or brokers serviced online businesses
“There was no M&A firms that did this. There were no business brokers. If you had a really big business, you couldn't call a big investment bank because they wouldn't return your phone call. So very much offered a service that no one else did, and really built …”
Insight
Smale: Direct Email Outreach Is the Best Way to Source Business Acquisitions
“The best way to find potential deals is email people, reach out.”
Insight
Smale: Investors back small repeatable track records over theoretical plans
“Investors are much more likely to work with people who can show a track record. Even if the track record is small, if you can show, Hey, look, look how many times I've turned. 10,000 dollars into 20,000.”
Disclosure
Smale: First website flip turned $100 into $500 on a credit card
“I think the first deal I ever did was I bought a website for a hundred dollars, got that to making a little bit of money every month, and then I sold it at the end of the month for more than I paid. So I think my first deal was something like a hundred dollars…”
