Cutthroat Capital: Unleashing the Power of Private Equity on Small Businesses - The Unfiltered Searcher's Guide

June 2, 2023 | Issue #1

Welcome to this edition of our controversial and thought-provoking entry "Cutthroat Capital: Unleashing the Power of Private Equity on Small Businesses - The Unfiltered Searcher's Guide." In this entry, we delve into the dynamic world of private equity and explore how it leaves its mark on small businesses. Brace yourself for a candid exploration of the search fund process, an unflinching focus on search target selection, ruthless deal structuring tactics, and the unrelenting pursuit of due diligence. Prepare to challenge traditional notions as we navigate the treacherous terrain of Cutthroat Capital. Let's dive in!

1. Search Process:

• SMB Buying Resources - great stuff written & said by people more experienced than me about ETA/search

• Search Fund Support Programs - potential options for search support

• Navigating the SBA 7(a) Maze - walk-through of how to get an SBA loan for your deal

• Building your Search Team - the advisors & support you need to get a deal done

• Using a CRM in Search - staying organized through a CRM

• Broker Questions - how to handle the gatekeepers of SMB deals

• Sprints & Marathons - managing your own energy during search

2. Search Target Focus:

• Deal Size

• Local vs National Search

• Reader Responses to Personal Passion vs Fundamentals

3. Deal Structuring

• SDE vs EBITDA vs Cash Flow - understanding the P&L in a small business deal

• Equity Deal Structure - structuring a self-funded search's equity (if you're considering bringing on investors)

• Math of Traditional vs Self-Funded Search - walk through different scenarios in both traditional search & self-funded search

• Debt & Downside Protection - how to think through the risk of adding debt to an SMB acquisition

4. Due Diligence

• Meeting the Owner - how to handle first meetings with sellers

• Creative Industry DD Tips & Hacks - basics of industry DD

• Quality of Revenue - assessing how businesses make money

• Breaking the Model - how to set up a financial model

• Addback Magic - understanding EBITDA adjustments

• Reason to Exist, Part 1 & Part 2 - testing the target's value in the market

• Compromising to Close - getting a deal done requires accepting risk, but which risk?

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Conclusion

As we reach the end of this edition of this issue, we hope you're ready to question everything you thought you knew about the dynamic world of private equity. We'll peel back the layers to expose the raw reality of how private equity makes its indelible mark on society.. From the cutthroat search fund process to the relentless pursuit of the perfect target, our exploration has been unapologetically honest. So, as you navigate the treacherous terrain of the private equity world, armed with our provocative insights, remember to challenge traditional notions and dare to disrupt. Until our next controversial encounter, keep the flame of curiosity burning bright. Stay controversial, stay informed.

You can reply to this email directly, or feel free to DM me on Twitter.

Thanks,

Michael Chase