CHAPTER 7 Managing Your Search Effectively: An Overview Flashcards
(17 cards)
What are the two closely related tasks at the beginning of the acquisition search?
Sourcing and filtering.
How many prospects do you typically need to source before finding the right acquisition?
At least hundreds.
Why is it important to maintain sourcing momentum?
Because attractive prospects can fall through, and restarting sourcing can take months.
What is a common rate of discovering new prospects once momentum is built?
About two new prospects every day.
What is a teaser in business acquisition sourcing?
A one-page summary of a business for sale, usually from a broker.
Why should you not focus entirely on one promising prospect?
Because many promising prospects eventually turn out to be unsuitable.
What is the goal of filtering in the acquisition process?
To eliminate weak prospects quickly so you can focus on promising ones.
What are the two stages of filtering?
Initial filters and deeper filters.
What is the purpose of initial filters?
To quickly reject unsuitable prospects using simple, readily available information.
What kind of information is used in initial filters?
Business description, size, location, and basic financials.
What questions should your initial filters help you answer?
Profitability, establishment, size, location, manageability, and lifestyle fit.
What are the two key questions in deeper filtering?
Is the prospect enduringly profitable? Is the owner serious about selling?
What indicates enduring profitability in a small business?
A customer base that buys repeatedly and doesn’t drive down profit margins.
How do you assess recurring customers early in filtering?
Infer from available data why customers buy from the business and stay loyal.
What is a Confidential Information Memorandum (CIM)?
A more detailed document provided by brokers with in-depth business info.
Why is assessing the owner’s commitment to sell important?
Because owners may change their minds, and wasted time on non-serious sellers can be costly.
What should you aim to do in deeper filtering?
Learn just enough to eliminate weak prospects, not everything about the business.
