This is an expanded version of a Twitter thread I posted last week, available here if you’re interested.
It’s becoming harder to stand out as a searcher using traditional means of communication like email and phone calls. Searchers still manage to talk to owners this way, but it’s not getting easier. As searching has become more popular in recent years, owners hear more and more frequently from groups looking to buy their business. Some hear from buyers weekly, or even daily.
Today, most searchers start by building email lists and collecting names and phone numbers. They’ll then run email and call campaigns using these lists in an effort to get on the phone with an owner who wants to sell. There is nothing wrong with this strategy, in fact it’s one I would still recommend. But it’s becoming a harder channel to make yourself stand out to a seller by itself.
My pitch in this article is to start a podcast, rather than starting a search fund, to acquire a company. I believe a podcast can generate proprietary deals, build industry expertise and credibility, and pay for your living expenses during the search. It’s a new way to get in front of potential sellers, and even make them come to you. This strategy is most effective if the aim is to acquire multiple companies, or if you plan to use the podcast after acquisition as a means of marketing or talent acquisition. The benefits of the podcast compound over time and, if harnessed correctly, can lead to opportunities for years to come.
The first step is picking an industry. The more specific the better. This step requires some preliminary research, phone calls, and deep dives to figure out what exactly you’re looking for. For some guidance on picking an industry, reference this excellent paper by AJ Wasserstein.
Second, you’ll need equipment. My podcast setup is basic and cheap. I use an ATR2100 microphone (the Honda Civic of microphones. Both of mine have been through the washing machine and still sound great) and a Zoom H4n Pro mobile recorder. The mobile recorder needs an SD card, and I’ve purchased a stand and cables for it to feed audio into my laptop as well as the recorder. For hosting I use Libsyn and WordPress for my website, created and maintained by Pink Robot Studios.
Once you’ve picked an industry and purchased equipment, you’ll want to start lining up guests. I recommend doing an interview podcast for two primary reasons. First, you’ll build relationships with owners in the industry. Second, you can leverage the industry expertise of your guests and begin building your own credibility.
To find guests, tap your personal networks and start cold calling and emailing owners in your industry. I’m sure they’ll be much more receptive to you asking them to be on your podcast than you asking to buy their business. It’s likely you’ll need to reach out to your first 20-30 guests, but eventually guests will begin to refer you to other owners they know. Over time, you’ll develop a strong network in the industry through having owners on the show and in your audience. You’ll also have owners reaching out to you to learn about your podcast, or even ask to be on the show.
I also recommend doing a weekly podcast. I did a monthly show for the first year and a half of Think Like an Owner and growth was very slow. Once I went weekly, growth exploded and it’s made the show more legitimate. Getting guests has become easier and listenership has grown tremendously. If listeners know every Tuesday morning at 6:00am EST there’s going to be a new episode in their queue, they’ll listen more often.
Now you have guests, start recording. Ask them about their business. How it works, what they struggle with, challenges they’ve overcome, war stories. Owners love talking about their business, use that. Ask a good question, then step away and let them go. In my view, your job as an interviewer is to find the rabbit-holes of the guest and find the topics they get excited about. Most of my best episodes have come as a result of the guest diving deep into a theme or concept they are passionate about within their business. If the guest sounds excited, the audience will feel it and become excited too.
You’ll likely handle the audio editing yourself for the first couple months, but eventually you can hand it off to a professional who’s better at it anyway. I use Mathew Passy for my podcast and can’t recommend him enough. When I handled it myself, I used Audacity and spent four to six hours for every recorded hour of time editing. The time commitment is one of the main reasons I started Think Like an Owner with a monthly frequency. Once I had income from sponsors though, I could hand editing off to Mathew and scale the podcast and my time.
Next, build a website to house your podcast and your weekly newsletter. I recommend a newsletter because it captures emails of interested owners for you. Write about your observations, industry analysis, helpful tips you learn along the way, review software your industry uses, book reviews, guest posts, opinions, shorter interviews. Writing online is powerful. Your writing spends every minute of every day looking for relevant owners. Then your newsletter captures their weekly attention. Email your subscribers when a new episode comes out for an extra touchpoint per week.
After you’ve published 30-40 episodes, it’s time to think about monetizing. Typical audience sizes for industry specific podcasts with 30-40 episodes in total might be around 1,500 downloads per week, as a guesstimate. That’s pretty small for any typical, market rate sponsorship agreement. But this is why you made a niche podcast. The power of a niche audience is, while it’s a small group, it’s entirely composed of one group. Service providers, banks, accounting firms, software companies who target that niche will want to sponsor your show because they know every audience member is a potential customer for their services.
And you want to target sponsors with high customer lifetime values, where each customer pays thousands per month. I know an owner who pays $4,000 per month to ServiceTitan, as an example.
Once you have some steam behind your show, begin making it known you want to acquire a company in the industry. Add a message on your website, leave a note at the end of your weekly newsletter, and mention it in your podcast intro. Use the targeted audience of business owners you’ve built to find a company you want to buy. I think you’ll be surprised who reaches out to sell to you. Perhaps an owner you’ve interviewed and built a relationship with is interested? Maybe they’ll be a long-time listener you’ve never heard from.
To this point, most listeners have viewed you as a budding industry expert, but not necessarily an investor. When they’ve reached out to you, it’s been in the context of wanting to learn about your interest in their industry or to share a potential guest. It’s highly unlikely someone’s offered to sell you their business. But once you make it known you’re interested, you’ll begin to see more inbound interest within the context of transition.
In summary, with the podcast you’ve built a unique audience of owners, relevant content, industry expertise and credibility, and paid for your search. You’ve bypassed those searchers who just send emails to owners who get them daily. You found a way to get the owners to choose you.
But this is a longer term strategy and there’s no guarantee it will lead to an acquisition faster than running a normal search. I do think it will lead to more proprietary deals and your network and ability to reach relevant owners will scale non-linearly. If you decide to reach out to an owner, you have a project to prove your dedication and interest in what they do, lending you credibility and boosting your response rates.
There’s also the potential through running the podcast you decide to make this your main business. Maybe you want to sell content or courses? Write industry research and guides? Consult with owners? Either way, you’ve built something unique along your entrepreneurial journey that will make you stand out to owners in your target industry.
Think Like an Owner Sponsors
Live Oak Bank – Live Oak Bank is a seasoned SBA lender focused on search funds, independent sponsors, private equity firms, and individuals looking to acquire small companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.
Hood & Strong, LLP – Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Oberle Risk Strategies – Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and Employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.
- This article by Julian Shapiro on Life Planning is the most powerful article I’ve read in the last month. I must confess, I haven’t done the exercise he talks about in the article yet, but I intend to soon.