Kicking off 2025 with a strong foundation
I spent the last few weeks setting up my foundations so my conversations with brokers and sellers have the best chance of being successful. While we had the holiday season in the middle of my first month, I was still able to get a ton accomplished and was able to get up to bat on a couple deals.
Operational Excellence with CRM
I implemented Pipedrive CRM to be able to track both communication and engagement with brokers and partners, as well as live and lost deals through the funnel. As more progress is made on a volume of deals, I expect to be able to use the data tracked through the CRM to help inform future actions. Secondly, the ability to add meta-data to contacts as I engage with many individuals through this journey will help in building and maintaining an efficient approach to deal flow development.
Deal-Sourcing Efficiency
This month has been a testament to the inefficiencies often encountered in the deal-sourcing process. I’ve spent time finding deals listed, signing NDAs and providing personal financial statements, only to discover that deals are already under contract. This seems to be par for the course, but is clearly a drain on resources. Finding ways to navigate this challenge is a high priority as we are now past the holidays and can hope that deal flow increases over Q1 2025. As a result of the CRM implementation, I’ve already been able to identify a few trends in this area and will use these insights as I move forward.
Deal Reviews
Even through the holiday season, there were a number of deals that came close to my target and were worth pursuing.
The numbers:
14 deals reviewed
1 IOI Sent
1 LOI Sent
1 LOI Rejected
Lesson Learned:
I submitted an LOI for a well-established professional services company specializing in field operations support for the consumer lending and merchant services industries. With 20 years in business, the company boasted remarkably stable COGS and consistent growth of nearly 9% YOY over the past four years.
However, the main risk in the business was customer concentration: historically, 40% of revenue came from just two customers. By 2024, that concentration increased to 58%, amplifying the potential risk.
To mitigate this, the deal structure I proposed needed to account for the added uncertainty. It would have required about one turn lower than the asking price and a 50% seller note, split into four tranches contingent on maintaining revenue over the first four years, with a final balloon payment at year five.
After the seller interview, I had a strong sense they wouldn’t entertain these terms—and the very quick rejection of my offer confirmed it. While this was a great learning experience, I now realize I could have saved a significant amount of time by recognizing these dynamics earlier in the process.
What’s Next
The work continues and I expect it to be a grind, but I’m committed to this full-time and will find the right deal. Now working from a strong foundation with my entity and website in place with a great deal team and a number of great advisors that are willing to help along the way, I’m confident. Looking forward to the future!
