How to know when you’re ready for acquisition #2

Most of these newsletters focus on your first business acquisition.

But once you get things figured out and business is going well…

You might start wondering if you should buy another business!

Today, I’ll share the signs to look for that signal that you’re ready, and how to approach your second acquisition differently than your first.

Signs you're ready for deal #2

You’re ready when your first business runs without you being there every day.

This means you’ve:

• Hired and trained people to handle day-to-day operations

• Documented all systems and processes

• Put a general manager in place (or have a strong team that doesn’t need you constantly)

If you’re still working 40+ hours per week in business #1, you’re not ready for #2.

My student Kris bought an oil pump maintenance business and kept his Chevron job. Once that business was systematized and running smoothly, he started looking at a fabrication shop as his second deal.

The key is making sure business #1 doesn’t fall apart the second you shift focus.

How to approach deal #2 differently

Your second acquisition should be easier than your first because you now have experience.

You know what red flags to look for, and understand how to negotiate and structure deals.

Here’s what changes:

Leverage your first business’s cash flow.

The profits from deal #1 can fund the down payment for deal #2, reducing your need for outside investors.

Move faster.

You don’t need to second-guess yourself as much, and can lean more on your instincts and experience.

Think about synergies.

Some buyers look for businesses in the same industry (like my rollup strategy with accounting firms), while others diversify across different industries for risk management.

There’s no one right answer, but think strategically about how your portfolio fits together.

The portfolio mindset

Once you’ve done two deals successfully, you start thinking differently.

Each business becomes a building block for the next one, and that's how you build a portfolio of profitable businesses that run by themselves.

Now, whether you're looking to buy your first or second business…

I occasionally share acquisition opportunities with subscribers ready to put in the work.

To get those opportunities, fill out this quick survey:

👉 I want to buy (or passively invest into) a business

Or, if you want to sell a small business and you’re actively looking for buyers, tap the link below and tell me about it:

👉 I want to sell my business

Onward,

— Ben Kelly