How acquiring a business can make you wealthy (with one purchase)

How acquiring a business can make you wealthy (with one purchase)

I have recently focused my content on systematizing and optimizing businesses from a operations perspective BUT I would be doing a disservice to you all if I didn't talk about what I like to do once I have a business that is systematized.

I buy another one and bolt it on.

Business acquisition is the fastest path to building generational wealth...bar none.

There is no other repeatable path to wealth that can take a low to no upfront capital investment and commonly achieve a 100-300% CoC ROI within the first year. That sounds insane! But it is 100% true and I have done it multiple times.

The best part is that it is achievable for most people and the determining factor in success is a good game plan, NOT having huge amounts of capital.

Business is hard and running a SMB can be very hard.

It is not for the faint of heart and it can be be risky. But all that being said, acquiring an existing business is WAY less risky than starting a business from scratch and it is much more profitable than many mainline investment strategies like stocks and bonds.

I have acquired multiple businesses and have 10x'ed my wealth in the span of a few years -- all while working a W2. I do not operate any of the businesses myself (trained GM's do it) and I get to work on acquiring more cash flowing business and adding them to my portfolio.

So if I have caught your attention yet, hang with me as I walk you through my latest deal to show you the power of acquiring businesses (with just $5k out of my pocket)

Latest Deal Specs:

1. Type of business: CPA Accounting Practice (30 yrs. old)

2. Price $1.3M

3. Revenue in 2021 = 1.1M

4. Cashflow = 580k

5. Reason for selling: Owner is in his late 60's and is looking to retire

6. Additional details: Come with 2 pieces of property. One is the office building and the other is a warehouse with a studio apartment right next door.

7. Terms of the deal

   1. $1.3M offer with 30% seller finance note (1 yr. clawback)

      1. Seller finance note is a 3 year term at 5% with equal 1/3 payouts each year.

   2. Remaining 70% is financed by a industry specific lender at 7.35% 5/5 term. So the first 5 years of payments are fixed at 7.35% and the next 5 years are variable depending on market rate.

   3. Cash we bring to the deal = $5k (for the lender fees)

8. I am doing a 50/50 partnership on this deal. My partner is a CPA (his license is required for the deal) and he will be running the day to day operations in the practice until we hire a CPA replacement (first 90 days).

9. Total cashflow after debt service, hiring a new CPA to run the practice, hiring a new bookkeeper and paying a large installment on the 30% seller note = 80k a year (for first 3 years)

10. Total CoC ROI -> 80k/5k = 16 ->1600% return on our money year 1

A 1600% return is not too shabby.

And that return will only get better as we reduce the recurring costs, outsource a lot of the simpler W2 tax returns, introduce more software efficiencies, and pay down the seller finance debt.

Acquiring businesses is a wealth hack that few people talk about and fewer are actually doing. It has radically changed my life and opened the door to awesome opportunities that would never have happened otherwise.

Want to learn more...

If you want to learn more about buying businesses jump on my calendar and pick a time that works for you and I can tell you how to get started.

This is biggest wealth hack that NO-ONE talks about and it is just getting started. There is $70 Trillion of wealth that will change hands in the next 10-20 years from the retiring Baby Boomer generation and the sooner you learn how to buy profitable businesses, the better.

As always, please let me know your thoughts and share this newsletter with others you think would enjoy it. Talk soon.

Onward,

Ben