What I buy
What I buy, in plain parameters.
No adjectives. If a business clears the box below, it gets a real look. If it does not, you find that out in a day rather than a quarter.
The box
Acquisition criteria
| Parameter | Criterion |
|---|---|
| Annual revenue | $1M to $15M. Lower middle market. |
| EBITDA margin | 15% or better. 25% and above preferred. |
| Track record | Three years or more of established, profitable operations. |
| Ownership | Control. Majority stake preferred. |
| Geography | United States, all fifty states. |
| Customer concentration | Under 25% from any one customer. Above that is flagged rather than fatal: it is a discount to a buyer for the same reason it is a risk to a lender. |
| Financials | Three years a third party can verify. Books that need explaining lengthen every conversation after. |
| Condition | Cash-flowing and stable. Profitable now, not on a projection. |
Cleared or not cleared. The box is the same either way.
Industries
Where the box usually lands.
Ten sectors with the margin band each usually carries, and four more in scope without one. One list, not a ranking. A business outside it that clears everything else is still worth sending.
Also in scope, and not margin-banded: specialty and precision manufacturing, engineered products, industrial and commercial services, and healthcare services.
Not pursued
- Restaurants, hospitality and food service
- Heavy or capital-intensive manufacturing
- Pre-revenue and concept-stage companies
- No growth path beyond the current owner
- Heavily regulated industries: cannabis, firearms and gambling
Cash-flowing, three years of books a third party can verify, and not on the list above. Send it.
What has to be true
The five things I look for before anything else.
Revenue that survives the transfer
Recurring or high retention. Revenue that walks out with the founder is not revenue, it is a relationship.
No single customer carrying the business
Concentration is the fastest way a clean-looking business becomes a bad one. It gets tested early, not in week six.
A team beyond the owner
If every decision runs through one person, you are not buying a business. You are buying a job with debt attached.
Systems that are written down
Documented process is what makes the first hundred days survivable and what makes the numbers trustworthy.
Somewhere left to grow
A business at the ceiling of its current capacity, with a path past it, is worth more than a bigger one with none. If the only growth plan is the current owner working harder, there is nothing to buy.
What does not clear
Nothing gets a polite no. Everything gets a price or a route.
Most of what arrives does not fit the acquisition track, and almost none of it is a dead end. It goes somewhere useful instead. These five are the exceptions on this track.
Pre-revenue and startups
There is nothing to underwrite. Cash flow is the subject of every conversation here.
Turnarounds and distressed
Off the acquisition track without exception. Different risk, different timeline, different practice.
No verifiable financials
Three years a third party can confirm. Books that need explaining lengthen every conversation after.
Anyone wanting a fund raised, capital placed, or a financing brokered
FM lends its own money against what it underwrites itself. It does not broker and does not place outside capital.
Anyone who wants the answer they came in with
The work is worth nothing if the conclusion is fixed before it starts.
Above the ceiling is not a no either. A business too large for this box gets routed to the right buyer in the network rather than turned away.
If it fits
Bring it, and get a real read on it.
A short intake, a signed mutual before anything sensitive changes hands, and an answer you can act on.