I Tried to Acquire a Small Business. Here's What I Learned.

10-second summary:

• I worked on a search fund for a few months in 2021. I didn’t buy a business, but I learned a lot. People frequently ask me about it, too.
• A search fund offers a great way to be an entrepreneur, have a more interesting day-to-day life, and have a shot at a high personal payout. 
• My investment theses: 1) apps building on top of software ecosystems, and 2) B2B media.
• I didn’t transact for three reasons: market (high multiples), capital (didn’t want to allocate more to runway and down payment), and business-operator fit (something you’re passionate enough about and have a skill set in). 
• Lesson 1: finding good deals is the hardest part.
• Lesson 2: everything gets easier when you have expertise (industry, functional, etc.) that you can leverage. This is true both for convincing sellers you are a worthy buyer and actually operating and growing your business.

In 2021 I left my job as a newsletter writer to pursue entrepreneurship by acquisition. Instead of starting my own company from scratch, I wanted to search for and buy an existing business. 

This approach to company ownership has exploded in popularity. A commonly cited driver of this trend is the so-called "silver tsunami”: Baby Boomers are aging, and with that comes retirement. Since many small businesses across the United States were started and are owned by baby boomers, now more than ever will there be a high volume of compelling businesses on the market for the first time.

There are a few options for funding a search. In a traditional search, you raise money solely from investors to pay your salary for 1-3 years while you search for the business and then use their capital to buy the company. You’re typically looking for larger businesses, and while you as the searcher own less at the end, you have more stability.