ETA Success and Selecting The Right Due Diligence Team - Deeper: EQ as You're Secret Weapon in Business Operations and Acquisitions
This Week On How2Exit, Chatting With An Expert On ETA, and another on building Due Diligence teams- DEEPER - EQ in Biz and M&A
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This week on How2Exit:
E135: Sam Rosati On His Journey From Being A Lawyer To Becoming An Entrepreneur In The ETA Space: (48:44)
About The Guest(s):
Sam Razati is the founder of Pursuant Capital and an expert in the ETA (Entrepreneur Through Acquisition) world. He has a background in law and has extensive experience in helping entrepreneurs buy and sell businesses.
Sam Razati shares his journey from being a lawyer to becoming an entrepreneur in the ETA space. He discusses the challenges of being an operator and the importance of finding the right operator for a business. Sam also talks about his current holdco and investment thesis, which focuses on small and medium-sized businesses in various industries. He emphasizes the need for a clear criteria when searching for a business and the importance of understanding the risks and potential for growth. Sam also discusses his involvement in the search fund community and how he helps aspiring entrepreneurs through boot camps and mentorship.
Entrepreneurship is possible for anyone willing to put in the hard work.
Finding the right operator is crucial for the success of a business.
Having a clear criteria and understanding the risks are important when searching for a business.
The search fund community provides valuable resources and support for aspiring entrepreneurs.
"Entrepreneurship is possible for anybody who's willing to do the hard-ass work it takes to do it." - Sam Razati
"The skills you may or may not have in managing people are far more important to searchers than any book has written about." - Sam
How to Succeed in the ETA World: Insights from Sam Razati
Note: The following article is based on a podcast interview with Sam Razati, founder of Pursuant Capital. The article is written in the voice and writing style of the podcast host.
In the world of entrepreneurship through acquisition (ETA), success is not guaranteed. It requires a unique set of skills, a deep understanding of the industry, and the ability to navigate the challenges that come with buying and operating businesses. Sam Razati, founder of Pursuant Capital, is a powerhouse in the ETA world. With his extensive experience in buying and selling businesses, he offers valuable insights and guidance to aspiring entrepreneurs.
In this article, we will delve into the key themes discussed in the podcast interview with Sam Razati. We will explore his journey into the ETA space, his approach to operating multiple entities, his involvement in the search fund community, and his insights on identifying great operators. By analyzing these themes, we can gain a deeper understanding of the ETA world and the strategies for success.
Journey into the ETA Space
Sam Razati's journey into the ETA space began with a realization during his time as a lawyer. He discovered that his true passion lay in the business side of deals, rather than the legal aspects. This realization led him to explore the world of search funds and small business acquisitions. Through trial and error, he gained valuable experience by buying and selling businesses, eventually leading him to found Pursuant Capital.
"I stumbled on a podcast… learned about search funds… and realized this might actually work. The only thing I know how to do is help people buy and sell companies." - Sam Razati
Operating Multiple Entities
Managing multiple entities can be a daunting task, but Sam Razati has developed a unique approach to ensure the smooth operation of his holdco. He focuses on being a "master of special projects," stepping in to handle accounting, finance, M&A, and other high-level tasks that are not necessary for the day-to-day operations of the businesses. By doing so, he allows the businesses to thrive without being reliant on his constant involvement.
"I built my entire holding company around the idea that in order for the day-to-day operations of any of these businesses to stay steady and grow, I can't be needed in the day-to-day." - Sam Razati
Involvement in the Search Fund Community
Sam Razati is actively involved in the search fund community, offering guidance and support to aspiring entrepreneurs. He hosts boot camps where he shares his knowledge and brings in industry experts to provide insights on various aspects of the ETA process. Through these boot camps, he aims to help individuals become owner-operators through acquisition and provide them with the tools and resources they need to succeed.
"The whole reason I do this is to help people get in the seat and get investment in small company purchases." - Sam Razati
Identifying Great Operators
Identifying great operators is a crucial aspect of the ETA process. While there is no magic formula, Sam Razati has observed certain traits that are consistent among successful operators. However, he acknowledges that the backgrounds of these operators can vary greatly. The key is to assess the risk factors associated with the business and evaluate the operator's ability to navigate those risks.
"The skills you may or may not have in managing people are far more important to searchers than any book has written about because they all write about the search phase and not the operating phase." - Sam Razati
Implications and Future Outlook
The ETA world presents both opportunities and challenges. It requires individuals to be adaptable, resilient, and willing to put in the hard work. Sam Razati's insights shed light on the importance of finding the right balance between involvement and delegation, as well as the need for ongoing support and guidance within the ETA community.
As the ETA space continues to evolve, it is crucial for aspiring entrepreneurs to stay informed and connected. The availability of resources such as boot camps and peer groups can provide valuable support and help individuals navigate the complexities of the ETA journey.
Sam Razati's journey in the ETA world offers valuable insights for aspiring entrepreneurs. His approach to operating multiple entities, involvement in the search fund community, and insights on identifying great operators provide a roadmap for success. By understanding the challenges and opportunities in the ETA space, individuals can navigate the path to becoming successful owner-operators through acquisition.
The ETA world is not for the faint of heart, but with the right mindset, skills, and support, individuals can thrive in this dynamic and rewarding industry. Aspiring entrepreneurs should embrace the opportunity to learn from experienced professionals like Sam Razati and leverage the resources available to them to achieve their goals in the ETA space.
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We are Back to doing two shows per week: Here is our other show of this week:
About The Guest(s): Roman Beylin is the founder and CEO of DueDilio, a marketplace for highly vetted due diligence service providers. He has a background in finance and investment banking and started his own business before launching DueDilio. Roman is also the creator of the newsletter The Business Inquirer, where he provides insights and analysis on various deals and transactions.
Summary: Roman Beylin, founder and CEO of DueDilio, shares his journey into the world of mergers and acquisitions (M&A) and the inspiration behind creating DueDilio. DueDilio is a marketplace that connects business buyers with highly vetted due diligence service providers. Roman explains the process of using DueDilio, from submitting an LOI to receiving proposals from service providers. He also discusses the importance of selecting the right team members for due diligence and offers tips on how to choose the best service providers. Roman highlights the most frequently requested services, such as financial due diligence and legal support, and emphasizes the need for marketing due diligence in understanding a company's customer acquisition strategies. He also mentions the vetting process for service providers and the one-strike policy for client complaints. Roman concludes by discussing the current state of deal flow and the opportunities in the M&A space.
DueDilio is a marketplace that connects business buyers with highly vetted due diligence service providers.
The most frequently requested services are financial due diligence and legal support, but marketing due diligence is also crucial for understanding customer acquisition strategies.
When selecting service providers, it is important to speak with multiple candidates to ensure a good fit and rapport.
DueDilio's vetting process includes a face-to-face interview, review of past work, background checks, and speaking with past clients.
DueDilio's referral fees are based on successful hires, and service providers do not pay a monthly fee to be part of the network.
"The best way to learn about something is, A, go do it yourself, B, write about it." - Roman Beylin
"There's a long line of people before me, so I get it. Better late than never." - Roman Beylin
"Due diligence is a broad term. We have over 25 different options for what someone can select for different types of due diligence." - Roman Beylin
Roman Beylin: Revolutionizing Due Diligence with DueDilio
In this thought leadership article, we explore the innovative platform DueDilio and its founder and CEO, Roman Beylin. Through a comprehensive analysis of the transcript from the How2Exit Podcast, we delve into the main themes discussed, including the origin story of DueDilio, the importance of due diligence in mergers and acquisitions, the services offered by DueDilio, the process of vetting service providers, the current state of deal flow, and the future outlook for DueDilio. By examining these themes, we gain valuable insights into the world of due diligence and the role that DueDilio plays in revolutionizing the industry.
Introduction: The Birth of DueDilio
Roman Beylin, the founder and CEO of DueDilio, stumbled upon the world of mergers and acquisitions (M&A) by accident. After selling his own business and experiencing the small-scale exit process, Beylin became fascinated with the world of small business M&A. This led him to start the newsletter "The Business Inquirer" as a way to learn more about the space and connect with like-minded individuals. Through the newsletter, Beylin received numerous requests for assistance with due diligence, which sparked the idea for DueDilio. Thus, DueDilio was born as a marketplace for highly vetted due diligence service providers, offering a wide range of services to business buyers.
The Importance of Due Diligence in M&A
Due diligence is a critical component of any M&A transaction, regardless of the size or nature of the deal. It involves a comprehensive examination of the target company's financial, legal, operational, and marketing aspects to uncover any potential risks or hidden issues. Beylin emphasizes the importance of financial and legal due diligence as table stakes in any deal. However, he also highlights the significance of marketing due diligence, particularly in understanding the company's customer acquisition strategies and potential for growth. By conducting thorough due diligence, buyers can make informed decisions and mitigate risks associated with the acquisition.
The Services Offered by DueDilio
DueDilio serves as a marketplace or network of highly vetted due diligence service providers. The platform offers a wide range of services, including financial due diligence, legal due diligence, technology due diligence, commercial operations, and more. Beylin and his team have built a network of over 200 service providers, ensuring that clients have access to the best professionals in the field. The process begins with clients submitting their project details and requirements, after which DueDilio matches their project against the database of service providers. Within two business days, clients receive proposals from multiple providers, allowing them to choose the best fit for their needs.
The Vetting Process for Service Providers
DueDilio has a rigorous vetting process to ensure that only the best service providers are included in their network. Prospective service providers must fill out an application and undergo a face-to-face interview to assess their background, experience, and client portfolio. DueDilio also reviews past works and requests to speak with past clients whenever possible. Additionally, a basic online background check is conducted to ensure there are no red flags. DueDilio operates on a one-strike policy, removing any service providers with legitimate client complaints. This thorough vetting process ensures that clients have access to reliable and trustworthy professionals.
The Current State of Deal Flow
Deal flow, the number of potential investment opportunities available, is a crucial indicator of the health and activity in the M&A market. Beylin notes that deal flow has been steadily increasing, with DueDilio experiencing a 15-20% rise compared to the previous year. However, he also acknowledges a temporary dip in deal flow when interest rates started to rise, causing some hesitation among buyers and sellers. Despite this, deal flow has picked up in recent months, indicating a positive trend in the market. Beylin also mentions an increase in broken deals during the due diligence phase, highlighting the importance of thorough analysis and vetting.
The Future Outlook for DueDilio
DueDilio is still a relatively young platform, having been launched two years ago. Beylin sees significant opportunities for growth and expansion in the due diligence space. As M&A activity continues to increase, DueDilio aims to scale its operations, automate processes, and spread awareness about its services. Beylin believes that the platform can provide valuable resources and support to business buyers, helping them navigate the complex world of due diligence. With the growing ecosystem and educational resources available, DueDilio is well-positioned to become a trusted partner for individuals and companies involved in M&A transactions.
Conclusion: Revolutionizing Due Diligence with DueDilio
DueDilio, founded by Roman Beylin, is revolutionizing the world of due diligence in mergers and acquisitions. By providing a marketplace of highly vetted service providers, DueDilio offers a comprehensive range of due diligence services to business buyers. The platform streamlines the process, making it faster and more efficient for clients to find the right professionals for their needs. With a rigorous vetting process and a commitment to service, DueDilio ensures that clients have access to reliable and trustworthy experts. As the M&A market continues to grow, DueDilio is poised to play a significant role in supporting and facilitating successful transactions. Watch Here: (44:11)
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This week’s “DEEPER” Dive: Why Emotional Intelligence is Your Secret Weapon in Business Operations and Acquisitions
In the fast-paced world of business, where data-driven decisions and logical reasoning often take center stage, there's a softer skill that doesn't get the limelight it deserves: Emotional Intelligence (EI). Often overshadowed by its more quantifiable counterpart, IQ, Emotional Intelligence is the ability to understand, manage, and effectively express one's own emotions, as well as to engage and navigate successfully with the emotions of others. It's not just about being "in touch" with your feelings; it's about leveraging emotions to make better decisions, build stronger relationships, and create enduring success.
Let’s get into it…
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FROM THE Editor:
Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. We are not attorneys, tax, or financial advisors and not qualified to give any such advice.
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