What a Buyer Looks for When Acquiring a Middle-Market Business

About the Episode

When selling your company, knowing what a buyer looks for is invaluable. Malcolm Peace owns an investment firm focused on buying and growing middle-market businesses. He talks about why he focuses on blue-collar businesses in Texas and taking them to the next level of growth. Malcolm discusses what a buyer looks for when evaluating a company, how technology can be used to help some owners step away from their company, how a typical deal may be structured, and the importance of being emotionally prepared.

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“There’s a lot of information that comes out through LOI conversations and a deal tends to die two or three times during this process. It can be a very exhausting emotional aspect for the owner that they may not have prepared for.”

Malcolm Peace

In this Episode

3:03 What does Tsetserra Growth Partners do?
7:55 What makes a company interesting as a candidate for acquisition?
9:02 What adjustments can be made to a business to help lower-middle market companies grow?
14:11 Are there challenges that exist for business owners who tend to work in the business rather than on the business?
20:16 How can an investment firm create alignment between owners and employees?
22:44 Is there a framework to help mitigate risk in an acquisition?
29:58 What is the number one mistake that business owners make?
32:03 How prepared are most business owners for due diligence?
37:09 What is the purpose of reps and warranties from the buyer’s perspective?
40:35 What criteria does Tsetserra Growth Partners look for when they are evaluating a business for possible acquisition?
45:57 How subjective are the opinions of appraisers?
47:25 What are the most important considerations when structuring a transaction?
52:05 How long does it take to close a deal?
57:48 Why is it so hard to sell a business?
1:05:07 What is a piece of advice for middle-market business owners?
1:06:51 Tsetserra Growth Partners is hiring Operating Partners, and this is what qualifications they are looking for.

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Resources Mentioned

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Acronyms or Terms Used in This Episode

  • OKRs: objectives and key results
  • 1031 Exchange: A way to postpone capital gains tax on selling a business or investment property by using the proceeds to buy a similar property.
  • Commitment Letter: A formal document from a lender stating that the buyer has been approved for a loan.

Meet Our Guest

Malcolm Peace

Malcolm Peace

President of Tsetserra Growth Partners

Malcolm Peace is president of Tsetserra Growth Partners (pronounced sit-Sarah), an investment firm in Texas that works with well-established businesses that have owners just about to retire who still want to see their businesses thrive. They identify profitable small businesses with revenues from $3.5 million to $12 million in stable industries, such as food & beverage, hospitality, manufacturing, logistics & distribution, and more. Malcolm and his team help rewrite the operating playbook of a company while maintaining the owner’s culture with a strong succession plan.

Malcolm has a B.S. in Psychology from James Madison University and an M.B.A. from the University of Virginia Darden School of Business.

Location Location: Austin, Texas

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