DealFlowSystem.net

There are million ways to die in the west. And start-ups. I have had my share. Why startups suck 1. 90% failure rate 2. 10% fail in year 1 3. 70% fail in 2-5 years 4. 75% of VC deals fail. Why do they fail? 42% did no market research and no market demand 29% run out of money. 23% not the right team ( I worked on a startup, at 9 months $2million in sales, $650M of GMV, got serious interest from super angels in 24 hours after sending deck, and the two owners pissed on each others couch and blew up the business) 19% get out-competed 18% pricing cost issues 17% user - UN friendly 17% product w/o business model 14 % poor marketing First time founders have 10% success rate This why I help people buy a business.

Why use debt to buy a company? Three reasons: Magnifies Returns: Bigger gains with less cash. Tax Shelter: Keeps more cash flowing in. Interest Over Taxes: It's smarter to pay interest than taxes. Having said that... take a cue from "8 Unconventional CEOs": Pay down that debt fast. Thinking of using SBA money? Remember, the SBA caps at $5 million in loans at a time. For example, if you have a $5 million loan and owe $4 million, your next loan can only be $1 million within a 10-year span. Crucial tip: Cash flow must cover all debt payments, including seller financing. Most SBA lenders want a 1.2x to 1.5x cash flow ratio. Simply put, your income should be 1.2 to 1.5 times your total debt payments. The higher, the better. If your cash flow doesn't cover the debt, it's not a fundable deal.

What if you own a company doing $3 million in sales with a 10% EBITDA, and after 5-10 years, you're exhausted and stagnant? You dream of hitting $5 million in sales and 15% EBITDA. Most entrepreneurs ask, “How can I do that? What’s the process?” There’s no book for that. Often, we get stuck and procrastinate, spending months or even years trying to figure out the “how.” Instead, ask, “Who already knows how to do this?” If someone can get you the results faster than you can on your own, isn’t it worth it? Ask “Who can do this?” It works with almost every obstacle. Try it—it’s refreshing.

Time is Your Most Precious Resource: Don't Waste It on Unfundable Deals not every deal is worth pursuing. Prioritize wisely, act decisively, and always keep your eye on the end game.

I asked this question in 2023 can anyone tell me how its working out?

Why would a seller sell you his cash? If the seller withdraws the cash, it's taxed as income and dividends. But if he includes the cash in the sale, it's treated as a capital gain, netting him more money.

A couple of ways to handle the broker asker for proof of funds, (don't lie) You can either: a. ignore this/move on to another deal...plenty in the ocean b. if you are funded by investors, which increasingly likely with bigger deals, you could say something like, "I have outside HNWI or investors supporting me. They are not interested in supplying these requests" or "I am a partner in an acquisition holding company, we are not a fund but a syndication of accredited investors - they are LPs silent partners, - they would not be interested filling out a proof of funds. If you do not want to sell to us, we will find another company to evaluate." if they are not open to that explanation, move on find another deal/broker... or c. Work with mainshares.com to help you with the deal.

One of my students, mailed 175 letters to local companies, and signed an LOI. Want to know how he did it - what the letter said? Yes, in the comments

Broker funny business - hard pass

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