Private Equity Masterclass: How to Buy Your First Company

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Are you looking to achieve financial freedom by moving beyond the high-risk startup game? This episode of Making Billions is your battle-tested blueprint for entering the world of private equity and small business acquisition. Host Ryan Miller,  breaks down the simple but brutally effective PE process: Buy, Fix, and Sell.

Discover the massive, often-overlooked $10 trillion wealth transfer opportunity as baby boomer owners of profitable small companies look to retire. 

We dive deep into why buying an existing business is the new building, understanding valuation, learning the non-negotiable rules of due diligence, mastering the deal structure that gets you funded and finally avoiding the five mindset mistakes of first-time acquirers.

This is the playbook for building an empire, one smart acquisition at a time.

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• 22:34 (Cont.) Private Equity Masterclass: How to Buy Your First Company

Transcript

Ryan Miller  

Private Equity is just a highfalutin label for a remarkably simple, brutally effective process, buy, fix and sell. That's it. It's about identifying a solid, often overlooked business and making it demonstrably better, and then selling it for more than you paid. It's that simple. 

Ryan Miller  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it. 

Ryan Miller  

All right, picture this right now, there's a massive silent transfer of wealth happening. We're talking about a $10 trillion opportunity as millions of profitable, small companies are quietly coming up for grabs across the US, and let's be honest around the world. See, we're not talking about some glitzy tech IPO or some splashy Wall Street auction, most of these gems, they're flying completely under the radar. They're valued at less than, say, 5 million bucks, and they're baby boomer owners who own over 40% of all US small businesses. They are ready to retire, to hand over the keys, to step into the next chapter of their life. So no headlines, no fuss, just a signed NDA standing between you and a life altering opportunity to achieve financial freedom. So if you're still caught up in the hype, thinking you absolutely have to build the next unicorn from the ground up, earning through venture capital and hoping for a miracle. Seriously, it's time to snap out of it. So stick around, because by the time we wrap this up, you're not just going to have some vague ideas, you will have the exact PE grade checklist, the battle tested blueprint that I personally use to buy my very first deals, leveraging 70% of other people's money and then not just grow it, but triple its cash flow in 18 months. See, this isn't theory, this is the playbook for how it actually gets done. Here we go. 

Ryan Miller  

So let's talk about why buying is the new building. Now, when you hear the word private equity, your mind probably conjures up images of mahogany desk and smoke filled boardrooms and guys in bespoke suits making billion dollar deals. It sounds intimidating, exclusive, like something reserved for the financial elite, right? But here's the truth, the raw, unvarnished reality, private equity is just a highfalutin label for a remarkably simple, brutally effective process. Buy, fix and sell. That's it. It's about identifying a solid, often overlooked business and making it demonstrably better, and then selling it for more than you paid. It's that simple, and when you break down the math, it's almost unfairly stacked in your favor, compared to, say, some of the gut wrenching uncertainty of startups. So we're going to walk through some common scenarios. So imagine you find a steady, reliable HVAC company. It's been around for 30 years, has a loyal customer base of, say, 5000 homes, and the owner is just tired. So you acquire it at, say, three times its annual EBITDA. That's its earnings before interest, taxes, depreciation and amortization, that's EBITDA. See, that's a core measure of a company's operating cash flow. So fancy word for just saying, like, how's that cash doing when you're operating.  Now, you roll up your sleeves, you don't need to reinvent the wheel. Maybe you implement modern scheduling software and GPS tracking to optimize the routes, saving fuel and time. You launch a simple recurring revenue membership for annual tune ups, a key driver for higher valuations. You slap on some modern dashboards to get real time data on the job. Then you strategically acquire one or two smaller local competitors, just tucking them into your existing operation, creating those what we call economies of scale, meaning sufficient, you don't need three CEOs, you got one. So you get those efficiencies, sometimes we call that economies of scale and now you're expanding your market share. So you integrate them, you personalize the combined entity, and then, after a few years of solid performance and smart improvements, you sell, you sell this bigger, better, more efficient business, not at three times EBITDA, but maybe at seven times EBITDA. Think about that for a second. That's a four turn arbitrage, a four point multiple expansion on, say, a million dollar profit base. That seemingly simple profit shift isn't a slight bump, it's a $4 million wealth swing before you even factor in the power of leverage. That's leverage is using other people's money. 

Ryan Miller  

So when you implement that now, you're further amplifying a lot of those returns. See, this isn't rocket science, it's just smart business supplied with discipline and a clear strategy. And here's the kicker, the real advantage for us normal people, the vast majority of Americans, businesses are private. They're not publicly traded giants. They're just mom and pop shop operations and family run enterprises that form the backbone of our economy. This means you're not just finishing in the same crowded, shark infested waters as Wall Street. You're in a vast, often overlooked Lake teeming with opportunities that the big institutional players simply ignore, just because the deal sizes are too small for their billion dollar funds, translation, less competition, more reasonable valuation multiples, and perhaps most. Most importantly, friendlier banks who are eager to lend against stable, cash flowing businesses. So this isn't about being the smartest person in the room, it's about being in the right room, the one Wall Street forgot about leading to the rise of the rest. 

Ryan Miller  

So let's talk about the three levers of private equity wealth and we're not talking big funds or any of that big corporate stuff. We're talking about individuals who own a business, they want to retire and sell it to someone else, and they're just signing over their rights to the cash flow of that business so that they can retire and then move that on, and you get the cash flow, and then you can follow that up. So it's a wonderful process. Every successful buyout, every wealth generating acquisition, rests on what I call the three legged stool of private equity markets miss one leg and your stool wobbles, maybe even collapses nail all three and you're not just growing your investment, you're systematically engineering a path to potential 10 times return on your initial equity. In fact, analysis of over 10,000 private equity deals show revenue growth and multiple expansions account for combined 86% of all value created. This isn't magic, it's just a systematic discipline approach. 

Ryan Miller  

So let's talk about the first leg, it's operational, Quick Wins. This is where one of my favorite people, Jocko Willink discipline equals freedom mantra really starts to come to life. See, immediately after you acquire a business, you dive into the trenches. We're talking about tangible, implementable changes that hit the bottom line almost instantly. So think about it, can you raise prices? See, studies show that a mere 1% increase in price can boost operating profit by 8 to 11% assuming no volume loss. See, most small businesses are chronically under priced. Can you identify a supplier, bloat redundant vendors, outdated contracts, and consolidate your purchasing power to drive down costs. I know in former life, when I was a CFO, I did many of those things, and it was magical, and it's not that hard. See, think about it, can you optimize staff scheduling for your billable employees to hit an 85 to 90% utilization rate, which is a benchmark for maximizing profitability? These aren't grand strategic shifts, they're just tiny focus moves when you buy a company and build those multiples. Even a 3% price bump, a 5% cut in cost of goods sold, is a small efficiency gain. Each one on its own, it might not seem that significant, but collectively, they drop straight to the bottom line, boosting your free cash flow, often within the first 90 days. See, it's about relentless execution, identifying inefficiencies and plugging the leaks. This creates immediate momentum and sends a clear signal to your team and your lenders that you mean business. 

Ryan Miller  

So now let's talk about the second leg, the strategic leverage, or otherwise known as cheap debt. This is the Warren Buffett principle of using capital intelligently, but with a powerful twist, so you're not just using your capital, Small Business Administration or SBA seven a loans. Those are an example, and they are an absolute game changer for acquisitions under 5 million. They're government backed, which means banks are far more comfortable lending, often for up to 90% of the deal price. You think that might help you to raise only 10% rather than the whole amount. So here's the kicker, this government guarantee allows for repayment terms of up to 10 years for the business acquisition, and up to 25 years if real estate is included. So what does that mean? Well, it means that your equity, or your investors equity, can effectively control as much larger of an asset with a much smaller down payment. So this isn't about reckless borrowing, please don't do that, but this is about strategic capital allocation. And banks love these deals because the government takes on a significant portion of the risk, so they get a solid interest generating asset, and you get the ability to magnify your returns exponentially. It's a powerful tool, but it does demand respect. You must understand your debt covenants, manage your cash flow vigilantly and never over leverage a business that can't reliably service the debt. That's a fancy way of saying, don't borrow more than you can pay back. 

Ryan Miller  

So let's talk about the third leg, this is what I call multiple expansion. This is where you transform a diamond in the rough to a polished gem ready for a premium on its exit. So let's say you bought your business at, say, a three times EBITDA multiple because it was a mom and pop operation at great cash flow, but lacked a formal reporting, a clear organization structure, or a second tier management layer. So your job is to professionalize it, to allow it to grow and create more jobs and more opportunities in the economy. So let's say you implement robust financial reporting systems, bringing clarity and predictability. You build out a capable management team so the business isn't solely dependent on one owner, meaning you, and you standardize the processes that you need to develop key performance indicators, sometimes they call them KPIs, and then you establish a strategic roadmap for the company to win hearts and minds, as we like to say. So when you set that up, and you go to sell that same business now with institutional grade reporting, a scalable management team and a demonstrable operational excellence process is no longer considered a mom and pop operation. It's now a platform. It's a predictable asset, and research shows that fast growing, professionalized companies can command 30 to 50% higher exit multiples that same business might be now worth a six times multiple or even higher. Now you've essentially transformed the markets of perception of risk and opportunity to what that perception translates into, which is a higher valuation. That jump from a three times entry to a six times multiple exit, that's pure value creation driven from simple strategic improvements that you've just done. 

Ryan Miller  

So now let's talk about how to find your perfect company. All right, so now you understand the mechanics. Now, how do you find that hidden gem? See the biggest rookie mistake, the one that'll have you spinning your wheels and feeling utterly overwhelmed, is endlessly scrolling through online marketplaces like BizBuySell. Now that's not to knock on them. I actually really like that website, but it can feel overwhelming on your first one. So we're not knocking that, or we're not saying it's not useful, because it is. What we are seeing is there are many tools that we want to use, so we want to add to what is already obvious that a lot of people use and but sometimes a little caution. Sometimes, when you go on a lot of these online marketplaces, it can seem like you're looking for a needle in a haystack, and frankly, most of those needles are either overpriced, picked over, or just have fundamental flaws. So instead, we're going to invert the problem Charlie Munger style. So you don't start with what's for sale. You start with what do you want? So here's what you do right now, grab a blank sheet of paper and write down the characteristics of your perfect company, and please be brutally specific. So essentially, what we're doing is we're defining what the industry likes to call your Buy Box, which is just to say, these are the deals that have to check these certain categories and if they do, we'll probably look at buying it. If it doesn't even meet these categories, it doesn't fit into our Buy Box, we're going to walk away. It might be great. It's just not what we're looking for. 

Ryan Miller  

So let's start defining the buy box with some of these examples. So the first thing that you can look for is the niche. Is it B to B services, light manufacturing, a specialized trade like commercial plumbing or residential HVAC? Really understand what is the niche? The next category is that you want to define in your Buy Box is the geography? Do you want it within an hour's drive, or are you open to relocating the right opportunity. Next you want to consider the financial aspect. What's the ideal revenue size? Is it a business with at least 20% gross profit margin and maybe a 15% EBITDA margin? Typically, those are considered quite strong. Perhaps recurring revenue is a must have, like, say, pest control over pool building, typically, recurring subscription based revenue commands a premium on the exit. So if you can find that and enhance that, or you find a company that doesn't, but could, that's a typical, good pro move when looking at the financial side and defining your Buy Box. If that's possible, definitely something you should consider. And also you want to think about maintenance contracts, subscriptions, repeat service agreements. You really want to understand how does the money flow and what goes on often when you buy a company, you'll command what's called a quality of earnings report, or, as I jokingly like to say, an audit light. And so you just want to understand the quality of revenue and how that company makes money. So we're talking a lot about the financials in the top end, as well as some of the profit margins. The other thing you want to look for, and it would be wise to help define your Buy Box is the owner profile. See an owner in their late 50s or 60s who's looking to retire, they often care about legacy employees and a smooth transition that can be your ideal seller. 

Ryan Miller  

So once you've defined your ideal target your buy box, then you start to build the list of the companies to get a good place to start is with the next codes, N A I C S, it stands for the North American Industry Classification System. So you find the codes for your ideal niche, then leverage a tool like LinkedIn Sales Navigator so you can filter by industry, geography, company size and even job title. So you can search for owner, President, CEO. See what you're doing is you're building a custom laser focused list of businesses that fit your Buy Box, likely run by owners nearing retirement age. Now you've got a list of 100, 200 maybe even 500 owners, do not send them a spammy, generic email. What you do is you craft a short, respectful and potent message. So here's a template for you. Hi, owner name, my name is, insert your name, and I'm an operator looking to acquire one of your great and then niche businesses in enter geography to own and operate for the long term. I'm not a broker nor a private equity fund. My goal is to find a business with a great reputation and build on the legacy that you've already created. Taking care of your employees and your customers, I can offer a straightforward, confidential process and a fair price for your business. If you ever thought about your own succession plan, I'd be grateful for a brief, confidential chat, all the best and then injuries your name. See, this message is powerful. It immediately differentiates you, addresses the biggest fears, confidentiality, legacy, employee warfare, and positions you as the solution. So you can send that to 40 owners, statistically, two will reply, one will be intrigued enough for a call. This pipeline costs you $0 just your time, and it consistently beats any M&A banker finding quality off market deals. 

Ryan Miller  

So now let's talk about the valuation of companies without the brain damage. So let's be real. If you're playing in the sub $5 million acquisition space, you don't need to get bogged down in complex academic financial models like discount cash flow or DCF. In this world, valuation is far more straightforward. Now I'm not saying don't do thorough and professional valuation or run that past your accountant, please do that, we're gonna pass your team. But what we're saying is there are wildly complex models for billion dollar acquisitions. I don't think that might be a little bit overkill right now. Again, work with your team, but really it just needs to be straightforward. And that really boils down to two key components, recasted, EBITDA, multiplied by a relevant sector multiple. That's it. Those are the main things that you want to look for. So recasted EBITDA, also called sellers discretionary earnings, or SDE. This is where the detective work begins. It means adjusting the reported profit to reflect the business's true cash generating power. So you really want to understand their true financial position. So you add back all the personal expenses the owner runs through the company, the family vacations disguised as marketing, the personal car leases, the country club memberships, the bloated salaries for family members who don't even work there. Now you are normalizing the earnings to show what an owner operating at arm's length would actually pocket, then here's what you do. Then you apply a sector multiple so you can find those online. Those multiples are industry specific and reflect the risk and the growth potential. 

Ryan Miller  

So for example, sticking with what we were talking about before, a stable HVAC service company, they might trade at 2.4 to 3.4 SDE, or a 3.4 to 7.8x EBITDA. So a niche B to B software company with revenue that's recurring could command a six to seven times multiple. A boring but essential B to B service provider might be three and a half to four and a half times. So you need to know these ranges cold for your target industry. So just do that by researching comparable sales searching online. There's lots of ways that you can find those multiples and then again, build that, bring that to your team. 

Ryan Miller  

But here's the most important rule in this section, a rule you must never, ever break. If a seller will not share their tax returns, the actual documents filed with the IRS or CRA or whoever it is they're talking to, walk away. Immediately. Walk away. No exceptions. Tax returns are the closest you will get to the ground truth of a business's financial position. And second, if the add backs are those personal expenses exceed 20 to 25% of the reported profit, again, walk away an excessive amount signals either poor financial discipline or worse, that the seller is trying to hide something. Your entire investment lives or dies on honest, verifiable cash flow, everything else, it's just lipstick on a pig. 

Ryan Miller  

So now let's talk about the deal structure that gets you actually funded. See, banks at their core, they're risk averse. They don't love risk, they love collateral, predictability and a clear path to repayment. So your job is to structure the deal, to make the lender sleep soundly at night. That's your job. You want a capital stack, which is the mix of debt and equity that is robust and aligns to everybody's interest. See a common lender, friendly structure for a sub 5 million deal, it would probably look something like this, 50% senior debt, typically an SBA back loan from a bank secured by the company's assets. See, this is the safest money in the deal. Next 25% of your capital stack is, say, a seller's note. This is huge. The seller will finance a portion of their purchase price, becoming your partner during those, say, one to three year transition period. It signals their confidence in the business's future. So I like to do those deals, because now you know that if they're selling something and it's not very good, they're still tied to the business. So it's almost like a little bit of a hedge on the future. It's typically subordinated, meaning the bank gets paid first. So structure it with a five year term and a blue payment to give yourself breathing room. The next part is 15% one, five, 15% investor equity, that's capital from outside investors who believe in you. And the deal this provides a buffer for the bank and shows you can attract sophisticated money. And then the next one is 10% is your equity, your skin in the game. This is non-negotiable. Lenders require an equity injection of at least 10%. It tells them that you are personally and financially committed and won't walk away if things get tough. See, this diversified stack caps your personal downside and critically incentivizes the seller to ensure a smooth transition, because their final payout depends on the company's continued success. So a pro tip here, always negotiate the seller note first get the seller emotionally committed to the headline purchase price. Say, yeah, it's great price, let's talk about, I love it seems like it fits. But, I mean, we're not telling them to lie, or I'm not telling you to lie. What we're saying is this is negotiation, and so do it ethically, do it morally, but also win the negotiation through the right ways. See, once they've mentally cashed that check, then you introduce the structure, including the seller note, it becomes a discussion on how they get paid, not if they get paid, and that is human psychology, and it is a powerful tool for structuring a deal that works for you and your lender. 

Ryan Miller  

Hey, thanks for listening to Making Billions. If you liked this episode, could you do me a huge favor and go leave a review? This helps us to get the podcast to more ears, to help people raise capital, learn fund management strategies and serve our mission to help fund managers and deal syndicators to gain greater hope and focus as they build their empire. All right, let's get back to the show.

Ryan Miller  

Now, let's talk about due diligence, but in plain English, due diligence, it sounds heavy, but it's simply a two to three week sprint to confirm every single story you've been told. It's about verifying the narrative that the company is telling you and uncovering any hidden landmines before you sign your life away. See, this is where you put your Extreme Ownership hat on, and you now own the facts. So first we mentioned it before. It's a quality of earnings report or Q, O, E or Q of E. Don't just look at last year's P&L, dig into recent monthly sales trends. If sales suddenly fell off a cliff two months ago, you need to know why was it a lost customer seasonality. You need to understand the business's rhythm. Next customer concentration, focus on that as well. So you want to get a list of the top 10 customers, and if possible, get permission to speak with a few of them. A good rule of thumb is that no single customer should represent more than 10 to 15% of total revenue. If one customer makes up 30% of the revenue, as an example, you have a major risk that needs to be priced into the deal, if not kill it entirely. Then inspect the assets. If the asset list says there are five delivery vans, go look at them, check the VINs. A 2019 van with 300,000 miles on it isn't just a vehicle, it's a near term capital expenditure that needs to be factored into your model. That's a fancy way of saying you're gonna have to buy a new van pretty soon, and you need to price that in. Finally, got to consider the legal side of it. You want to have an M&A savvy lawyer review all the contracts, leases and employee agreements. Are there any change of control provisions that would cause any problems, so meaning as they sell or transition from themselves to you. Are there any issues? There? Are there any pending litigation? You need to understand it, not a deal breaker, but you at least need to understand what it is that you're getting involved in. See at the end of every day during diligence, you want to create a simple list. Color code, it. This is what I do. Color code it green to confirm no issues, yellow, minor questions that might need some follow up and red, obviously red flag, potential deal breakers, and also blue opportunities. Those are upsides that you've discovered that actually wasn't in your initial plan. So these are those nice surprises. If your red list gets way too long, you've got two choices. Renegotiate the price to reflect the new risks, or just walk away. Don't get emotional. Fall in love with the facts, not the deal. Always follow trend lines over headlines. 

Ryan Miller  

Now let's talk about the 100 day value creation sprint. So let's assume now you've closed congratulations. The real work starts now. This is the 100 day sprint, where you lay the foundation for that multiple expansion. So here's a schedule that you can follow days 1 through 15. This is visibility you want to walk in, gather the team and get absolute clarity, install QuickBooks Online or some similar cloud systems, system that you need to then implement daily dashboards with three to five critical KPIs for a service business that might include yesterday's sales, today's cash balance, new leads generated, customer satisfaction score and billable employee utilization rate. You need to manage by flash, not by folklore. This empowers the team with clear goals and real time feedback. Next on days 16 through 30, focus on price. Small businesses almost always under price as we said, even a 1% price increase can lift profits by over 10% so identify your lowest margin products or services and surgically raise their prices by, say, 5% you might lose a few price sensitive customers. That's okay, the impact on your bottom line will be immediate and significant. Then let's transition into days 31, through 60. This is where you want to focus on procurement and processes. Go through your vendor list, bundle your eight, say eight supply vendors down to one, use your increased volume to demand a 3% rebate that's pure margin. Simultaneously, start mapping core processes. How is a new customer onboarded? How is an order fulfilled? Document everything to find bottlenecks and inefficiencies. This is one of the first things that I did when I joined a company as this new CFO is we wanted to create standard operating policies, but those have to be backed up through process. So I followed something called SOS, stabilize, optimize, standardize, and so we found out the problems that were unstable, stabilized it. Then we optimize it through process mapping, and then we standardize it through SOPs. See standardizing processes, they make the business scalable. So really drill it down during those days. And then once you're done, day 61, through 100 you focus on people and the pipeline. See with initial fires out, focus on your team, identify your key players and ensure they are happy and aligned with the vision. By day 90, you should announce at least one tangible, quick win per department, and that builds momentum, but it also builds trust in your leadership. Then you can start building your add on acquisition target list. You stabilize the platform, and now it's time to think about the roll up strategy. And here's a critical rule, do not buy another company until the first one is consistently cash flowing above your plan, or at least for three straight months. You got to have discipline before you have the expansion. Prove the model, then stack the next brick. 

Ryan Miller  

So now let's talk about three exits you cannot ignore. See, buying is only half the journey a smart acquirer begins with the end in mind that three times EBITDA business that you bought and that could fetch us seven times multiple if you position it right for the buyer. So you're not just selling a company, you're selling a story back by hard numbers. There are really three primary exit avenues. Number one, strategic buyers. See larger companies in your industry who acquire businesses for a straight strategic fit. They want your customers, your geography or your team to them, your business is just a puzzle piece, and they will pay a premium for that synergy. The second one is private equity as a second bite at the apple. See, a larger PE fund. Let's say they acquire your platform. You've done the hard work of professionalizing and growing it. See, for them, it's a de risk, well oiled machine, and they pay handsomely for that. Number three is a dividend recapitalization. See, this is an advanced move. Once you significantly increase the cash flow, you go back to the bank, take on new debt against the more valuable business, and use the proceeds to pay a large dividend to yourself and or your investors. See here you're now de risking your own capital and can continue to own and operate the cash flowing asset. So your job is to package this story. Here's the platform we built. Here are the tuck-in acquisitions we integrated. Here's the 40% margin we achieve, and here's a clear runway for future growth. See, nothing ignites a bidding war over you like rivalry when the time is right, consider an NDA dinner with three direct competitors. The fear of a rival acquiring your asset is a powerful motivator for a premium offer, and remember the best time to sell is when you don't need the money. Sell from a position of strength, always. 

Ryan Miller  

Now let's talk about the five Mindset Mistakes of first time acquirers. So now you have the roadmap. So let's talk about the psychological traps that can derail 90% of first time acquirers. Mistake number one, analysis paralysis. So you find a great company spitting out $300,000 in free cash flow, but you're stuck in Excel modeling month six of your pro forma. Meanwhile, a decisive buyer moves in, they get the core facts, verify them, and then they buy. Instead, you need to do that, build that conviction and move perfect is always the enemy of done, not saying cut corners, not saying break the law, but we're saying there's a point that it it really is good enough, and you have all the information you need. Your eyes are not going to open any wider. And so now it's the time to make the move. Mistake number two, falling in love with the product and not the cash flow. You love the company's cool widget or its nostalgic brand story, but buyers don't pay for nostalgia. They pay for predictable earnings. So you got to be a detached, disciplined investor. If the numbers don't work, your love for the product, it's irrelevant. Mistake number three is going solo. Thinking you're a lone wolf is a recipe for disaster. You need a deal team, even on a small deal. See, at a minimum, you want an M&A savvy lawyer, not your uncle the real estate attorney. You want a CPA who understands Q of E reports and an insurance broker who can assess the risk. See, don't be an expert in everything, just build a network of experts who are experts at everything. Mistake number four is ignoring company culture. This can be the silent killer. You can have perfect financials and build a brilliant plan, but if the foreman, who knows everything, quits on day 45 because he feels disrespected, your multiple is going to melt right before your eyes, and that's why the saying goes, culture eats strategy for breakfast. See a study by Gallup, it showed that satisfied employees can increase profitability by up to 21% imagine that people that just like working there, profit goes up 21% spend time understanding the team, communicate openly. A motivated team makes a good deal great, and a demotivated team will sink it. Mistake number five, under resourcing your working capital. See, you buy the businesses, but you forget about the day to day cash needed for payroll, inventory and unexpected repairs, you need a buffer. So what you want to aim for is you want to aim for a minimum of six to nine months of working capital runway in the business. So if you run out of cash, the bank owns you. Liquidity is the oxygen of your business. 

Ryan Miller  

So let's land this plane and wrap it up, let's bring it all home. The opportunity in small business acquisitions for normal discipline operators, it's immense, and it's right there for the taking. You now understand the three private equity levers that drive value, operational wins, strategic debt and multiple expansion. You have a sourcing engine to find off market gems. You have a valuation framework that cuts through the noise, gets right to the signal, and you know how to structure a deal that gets funded and how to execute a 100 day sprint that creates immediate value. So the only thing left is motion. Inaction is the death of ambition. So here are your marching orders this week. Write down your ideal company criteria, including target multiples and margins and email three owners who fit that profile, just like we talked about the buy box. And you can use that script we discussed, or you can use something else, just three people. Then your homework this month is to schedule two facility visits, get on the ground, see the operations with your own eyes. Your homework for this quarter is to submit one non binding letter of intent. Get skin in the game. Make it real for yourself. So you take these concrete steps, and I promise you, 12 months from now, you won't be watching another YouTube tutorial wondering, what if you will be the one actively building an empire, one smart acquisition at a time. Now, hit that subscribe button and drop your single biggest fear about buying a business in the comments below, and let's talk about it together. Go turn that first acquisition from a dream into a deal well done. You do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes, plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better. And make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.