Subscribe to Take Five to get our top 5 quick weekly reads on the world of SMB, M&A, and EtA from the team at Kumo. Kumo aggregates thousands of deals into one easy-to-use platform so that you can spend less time sourcing, and more time closing deals.

Before we get to our Take Five, we have some news: we’re launching our private beta for Kumo this week!

With Kumo, see hundreds of deals each week from many sources (we’re adding more sources weekly!) and get access to everything you need to browse and filter deals. Plus, you’ll be able to:

• Filter deals by industry and category
• See where the same deal is shared across multiple sites
• See when deals are updated for the most recent information
• Save deals for easy browsing later

If you (or someone you know!) would benefit from using Kumo, we would love to have you on board to help shape the future of deal search. Register for our Beta to get early access for free. Registration to our Beta program is now open here.

Sign up for the beta

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Take Five #009: “We now know who is rich in America. And it’s not who you might have guessed.”

1. The New York Times made the shocking discovery that owning an SMB is an excellent path to wealth:

Breaking news:

“We now know who is rich in America. And it’s not who you might have guessed.

A groundbreaking 2019 study by four economists, “Capitalists in the Twenty-First Century,” analyzed de-identified data of the complete universe of American taxpayers to determine who dominated the top 0.1 percent of earners.

The study didn’t tell us about the small number of well-known tech and shopping billionaires but instead about the more than 140,000 Americans who earn more than $1.58 million per year. The researchers found that the typical rich American is, in their words, the owner of a “regional business,” such as an “auto dealer” or a “beverage distributor.”

This shocked me.”

And the NYT also made the revelation that equity begets wealth:

“First, rich people own. Among members of the top 0.1 percent, the researchers found, about three times as many make the majority of their income from owning a business as from being paid a wage. Salaries don’t make people rich nearly as often as equity does.”

From the NYT’s article “The Rich Are Not Who We Think They Are. And Happiness Is Not What We Think It Is, Either.”

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2. A great reference guide to @SMB_Attorney’s Legal M&A Masterclass:

@SMB_Attorney’s newsletter is notoriously chock full of excellent content, and one reader put in the work to organize it into a reference guide:

“As I ramp up my SMB search, I’m finding myself needing to reference some of the excellent content that @SMB_Attorney has put out (for free!) on Twitter. However, due to some peculiarities with Twitter’s Revue, I find it difficult to quickly parse the content when trying to remember which session is relevant to my current problem. So, I’ve decided to create an easier-to-use summary of all editions of the Masterclass newsletter. With that said, the summaries below are my own interpretation of @SMB_Attorney’s content.”

A snapshot of the guide’s sections:

From Braden Schrock’s “Navigator: SMB Legal M&A Masterclass”

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3. Thoughts from Tim Ludwig on the power of cold outreach (plus a short personal story on how it has impacted him):

Snippet from the second edition of his new newsletter “Letters of Intent”:

More recently, cold outreach has moved from physical mail and phone calls to email, text, and social media. This makes the outreach much easier to scale and people more accessible than ever. Over the past 15 years, I’ve watched scores of recent MBAs eager to buy and lead small companies develop very sophisticated methods of identifying and contacting business owners whom they hope to convince to sell their companies. With enough effort and diligence, it often works. Imagine that! A cold outreach leads to a successful, life-changing transaction involving millions of dollars.

From Justin Burris and Tim Ludwig’s “The Power of Cold Outreach”

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4. Why one searcher is going the traditional model:

David LaMore’s perspective on raising a traditional search fund and why he chose it over the alternatives:

I commonly hear from prospective searchers their doubts about pursuing the traditional path because of their desire to control more of a firm and report to no one. Those are fair assessments but I believe they are a bit short-sighted.

Lacking executive management and deal experience, I wanted to partner up with people that would provide guidance and resources in building a great organization. Also, I appreciated the different skills that traditional searchers must develop during the fundraising, sourcing, transacting, and operating stages, some of which are muted in other models.

For me, a traditional search fund provided the proper balance of incentives, support, challenge, and opportunities that cannot be found elsewhere. Yes, the terms and control may not be as attractive to the searcher as a self-funded model, and the infrastructure is nonexistent unlike an incubator, but choosing traditional enabled me to craft my own narrative while partnering with some exceptional people. We competitive types tend to want to do everything ourselves without asking for help. But for me, the value of a strong investor group outweighed the costs associated with seeking outside capital.

From “A deeper look at raising a search fund” by David LaMore

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5. We love a good roundup of lessons learned from people who are in the thick of operating. 13 thoughts, 1 year post acquisition:

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Reminder: we’re launching our private beta for Kumo this week!

With Kumo, see hundreds of deals each week from many sources (we’re adding more sources weekly!) and get access to everything you need to browse and filter deals. Plus, you’ll be able to:

• Filter deals by industry and category
• See where the same deal is shared across multiple sites
• See when deals are updated for the most recent information
• Save deals for easy browsing later

If you (or someone you know!) would benefit from using Kumo, we would love to have you on board to help shape the future of deal search. Register for our Beta to get early access for free. Registration to our Beta program is now open here.

Sign up for the beta

Loved what you read? Subscribe to Take Five to get our top quick reads every week from the team at Kumo. Kumo aggregates thousands of sources into one easy-to-use platform so that you can spend less time sourcing, and more time closing deals.

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