Breaking down a case study of a $200M per year company, built in less than 6 months by acquisitions.Jan 06, 2022
Today we will be breaking down a case study of a $200M per year company, built in less than 6 months by acquisitions.
But before we jump into the breakdown, who the heck am I?
I am Moran Pober, the CEO and Founder of Acquisitions.com, and over the last two years we have been involved in over 100 small business Acquisitions, the majority of these businesses did over 7 figures per year and were across all sectors of the economy.
The company we will be breaking down today is a conglomerate style roll up where the idea is to purchase multiple small businesses in complementary sectors to leverage economies of scale and improve the multiple of your overall business.
If that sounds confusing to you, don’t worry we will break it down more simply below.
So this particular roll up we did, we acquired 16 businesses in a 6 month time period, these companies had combined revenues of $200MM and EBITDA of $62MM.
I know what you are probably thinking, “Moran that's cool but is it possible for me to do something like this? Do I need experience or high level connections?”
The answer to that is, the proof is in the pudding. Our client for this particular roll up came from a completely different sector and had no prior experience running the companies that we acquired. He did however have a strong commitment and resilience to figuring things out and overcoming challenges.
He is proof that if you want it bad enough, this upward path is open to you. Also understand that although these are bigger numbers, this same concept works on all levels, you don't need to go and acquire $100M+ in revenues if you are happy with $10M or even $1M
So what are the steps to go out and achieve this.
#1. Pick the sector, this was pretty straight forward, we decided to go with particular types of online companies.
#2 Building the team, next we went and built my client's dream team. CFO, a great lawyer and and overall M&A strategy expert who also acted as the CEO.
#3 Set KPIs, we decided the key performance indicator would be meaningful conversations each week. These could be with business owners, investors, banks or anyone that could help him create his reality.
#4 Negotiations, once the KPIs were set and the conversations were taking place, he eventually ran into business owners looking to sell. He negotiated separate deals with each of them accordingly to purchase their companies.
By the numbers, overall my client was able to buy 16 of these companies, on an average of 5x multiple (Businesses are valued in multiples of their yearly net profit. E.g a business doing $1M per year would be worth $5M per year at a 5x multiple)
He then raised capital to buy and operate these businesses and started operating them under an umbrella as a much larger company.
If you compare this umbrella company with public companies in the same sector, they are trading at 30x multiples.
What does that mean? You are buying at 5x and then getting valued at 30x, you are harnessing economies of scale and reaping the benefits of business acquisition rollups.
There is no wonder this is what the richest people in basically every country do or are involved in.
“The best roll-ups are created when you combine operational success with cultural success”