“If you pay attention, you will see where the opportunity is.”
Recently I read Sam Zell’s Am I Being Too Subtle. In it, he repeatedly emphasized, “When others are looking right, go left.” In today’s economy, there are a number of opportunities hiding in plain sight that go unnoticed by many who are looking to turn one dollar into three dollars.
Are you aware we are witnessing many legacy businesses trade hands? Private equity and hedge funds have made a killing buying and selling legacy businesses. What if I told you the average main street investor can copy these techniques? There is $30 trillion in assets transferring right now from Baby Boomers to subsequent generations. A lot of that wealth is tied up in small businesses (think plumbing, HVAC, and other small businesses).
In addition, many small businesses fail within the first 5 years. A main street investor can buy into a business and from day one, have cash flow coming in as opposed to starting from 0. It’s much easier to go from 1-2 than it is to go from 0-1. Meaning it’s much harder to start and business and make it profitable than it would be to buy a mature business and increasing revenue. Capital makes everything easier.
There is a bull case for small business acquisitions. The vast majority of these small businesses will be unfit for acquisition, no question about it. However, if you go on any golf course midday during the workweek, you’ll find it filled with small businesses that own their own business.