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Acquisition Entrepreneurship: Why Buying Beats Building

11 min read

Acquisition Entrepreneurship: Why Buying Beats Building

Sarah Moore owned nothing but a 2012 RAV4. No savings. No collateral. No investors. Eighteen months later, she owned a multi-million dollar business that ships packaging to Boeing, SpaceX, and Disney.

The business was eggcartons.com. She found it after having 50 unpaid Craigslist interns sift through 400,000 private companies. She contacted over 100 banks before one agreed to an uncollateralized loan. The final structure was 75% bank debt and 25% seller financing. Her cash outlay at closing was zero.

The story is not unusual. On My First Million, acquisition entrepreneurship has emerged as a recurring theme—a path to wealth that requires neither a brilliant idea nor venture capital, just persistence and a willingness to buy what already works.

What Is Acquisition Entrepreneurship?

The concept goes by several names: ETA (Entrepreneurship Through Acquisition), search funds, or simply buying businesses. The core premise is straightforward. Instead of spending years building a company from nothing, you purchase one that already has customers, revenue, and systems.

The approach inverts conventional startup logic. Founders typically assume they need a novel idea. Acquisition entrepreneurs assume they need deal flow and financing. The businesses they target are often boring, stable, and overlooked by anyone chasing the next unicorn.

Andrew Wilkinson, who built Tiny into a portfolio worth hundreds of millions, describes the opportunity in terms of simple operational improvements. His firm acquired We Work Remotely for roughly 3-4x earnings. The previous owners had not raised prices in five years. Wilkinson’s team immediately increased prices from 299, hired an SEO consultant, and added email marketing. The business went from 4 million in EBITDA. Two employees. Minimal ongoing work.

The transformation required no technological innovation. It required noticing that the previous owner had left money on the table.

The Deal Funnel: A Numbers Game

The mathematics of acquisition are humbling. Sam Parr once outlined Tiny’s funnel: they reviewed 1,000 companies, met with hundreds, issued letters of intent for about 200, and closed only 15 to 18 deals. That represents a 3% conversion rate from initial review to closed acquisition.

The implication is practical. To buy three companies, you must talk to 100 sellers. Most will say no. Many will waste your time. A few will have financials that do not survive diligence. The work is unglamorous—more like sales than strategy.

Sarah Moore’s experience confirms the pattern. She contacted over 100 banks before finding one willing to make an uncollateralized loan. Her response to rejection was simply to keep calling. The persistence itself became the competitive advantage, filtering out anyone unwilling to endure the process.

One guest on the podcast put it directly: anyone who wants to buy and operate a small business can do so. It is not a matter of can or cannot. It is a matter of will or will not.

How Zero-Down Acquisitions Work

The financing structures that enable acquisition entrepreneurship are older than venture capital but less understood. The core mechanism is the seller’s note.

When buying a business, the seller does not need to receive the full purchase price at closing. If the business truly generates the cash flow the seller claims, there is no logical reason they would refuse to finance a portion themselves. A typical structure involves the buyer paying 75% of the purchase price through a bank loan, with the remaining 25% paid to the seller over time.

From the buyer’s perspective, this eliminates the need for personal capital. From the seller’s perspective, it demonstrates confidence in the business they built. Banks that view the seller’s note as a form of equity are more willing to extend credit. Those that insist on additional collateral become less relevant to the transaction.

SBA Loans expand the possibilities further. The Small Business Administration guarantees a portion of loans made for acquiring existing businesses, allowing buyers to secure financing with the acquired business itself as collateral. The entrepreneur’s job is finding a business stable enough that lenders view it as self-collateralizing.

Sarah Moore’s thesis was explicit: buy a business with all debt to retain 100% ownership, and find something stable enough that the business itself served as the collateral. Her only personal asset was worthless for this purpose. The RAV4 stayed out of the deal.

Case Studies from My First Million

We Work Remotely: The Boring Upgrade

Andrew Wilkinson’s acquisition of We Work Remotely illustrates what operational improvement looks like in practice. The remote job board had established traffic and a loyal user base but suffered from owner neglect. Prices had stagnated. Marketing was minimal.

The improvements required approximately one day of work. A 30% price increase took ten minutes plus planning. SEO and email marketing followed. The business grew from 4 million in EBITDA without adding headcount.

The lesson is not that all acquisitions offer such easy returns. It is that the previous owner’s ceiling often becomes the new owner’s floor.

Bolt Storage: Content as Capital

Nick Huber built a 103 million on acquisitions. Of the 50,000.

The combination proved synergistic. Content about the boring mechanics of storage investing attracted exactly the audience most likely to invest in storage deals. Neither the content nor the real estate alone would have scaled as effectively.

Huber’s portfolio was acquired for 190 million. The appreciation came not from market speculation but from patient accumulation of unglamorous assets.

Franchise Empire: Cal Gulapali’s 120 Locations

Cal Gulapali worked as an investment banker before buying a few butcher shops. Then he asked an Orange Theory owner how much money the franchise made. Seven years later, Gulapali operates 120 locations across eight different brands, generating more than half a billion dollars in annual revenue.

The economics explain the trajectory. A real estate investor celebrates 12 to 16% IRR. A franchisee is disappointed with anything below 25%. The cash-on-cash returns often double what real estate offers, though the operational complexity is substantially higher.

One data point worth sitting with: there are more millionaires generated from franchising than from all players who have ever competed in the NFL, combined.

The College Laundromat: 10x in Four Years

A guest named Alex bought a laundry service business during his freshman year of college. The purchase price was 30,000 to $300,000 by targeting affluent parents rather than students and setting up a booth at orientation.

Four years later, he sold the business for $400,000—more than ten times his purchase price. The laundromat was not where he built his wealth. It was where he learned the mechanics of buying and operating.

The Holding Company Question

The holdco model has become fashionable among acquisition entrepreneurs. Build a portfolio of businesses, install CEOs in each, allocate capital across the portfolio, and compound wealth without operational involvement.

Michael Girdley, who runs ten businesses generating over $100 million in revenue, offers a corrective. The misconception is that holding companies require less work. In reality, they require different work—and all the habits that make someone effective as a CEO become counterproductive in a holdco context.

Nick Huber has made a similar admission. After being labeled a “holdco guy,” he started more than ten companies over three years. Four have been shut down. His evolved perspective: running a holding company is overrated. Most wealthy people he knows focused on one thing for a long time.

The romance of empire-building appeals to certain personalities. The evidence suggests that focus typically beats diversification.

Key Frameworks

Seller’s Note Structure

Finance part of the acquisition by having the seller hold debt paid over time. A common ratio is 25% seller note plus 75% bank debt, resulting in zero cash from the buyer at closing. The seller’s willingness to hold a note signals confidence in the business and aligns incentives post-close.

Operations Moat

Target businesses with complexity that cannot be easily replicated. Physical manufacturing in the US or Mexico, unusual logistics, specialized industry knowledge—these create barriers that prevent competitors from entering. Chinese imports cannot compete with a business that requires local presence and institutional knowledge.

Independent Sponsor Model

Unlike traditional private equity, raise capital on a deal-by-deal basis rather than from a fixed fund. Each acquisition may have different equity partners. The flexibility allows for varied deal structures but requires relationship maintenance with a broader investor base.

Liquidity-First Investing

Focus on how quickly cash can be extracted rather than long-term equity appreciation. If the initial investment can be recovered in two to three months, the risk profile changes substantially. Most investors focus on equity appreciation. Liquidity focus de-risks the downside.

Profit First for Acquisitions

Strip cash from acquired businesses immediately, leaving only two to four weeks of operating capital. The discipline forces efficiency and reveals whether the business can function without excess reserves. Andrew Wilkinson applies this approach across the Tiny portfolio.

FAQ

Can you really buy a business with no money down?

The zero-down structure is real but not common. It requires a seller willing to finance 20-30% of the purchase price and a bank willing to treat that seller’s note as equity. Sarah Moore’s eggcartons.com deal closed with zero personal capital—75% bank debt and 25% seller financing. The constraint is finding the right combination of willing seller and accommodating lender, which typically requires contacting dozens or hundreds of each.

How long does it take to find and close a deal?

Sarah Moore searched for 18 months before finding eggcartons.com, reviewing 400,000 companies with help from unpaid interns. Andrew Wilkinson’s team converts about 3% of companies they review into closed deals. For individual buyers without a team, six to eighteen months of active searching is typical before closing a first acquisition. The timeline shortens with experience and reputation.

Is a holding company the right model?

It depends on personality and skill set. Michael Girdley warns that holdco operators need entirely different habits than CEO operators. Nick Huber started ten companies in three years and shut down four. Most wealthy people he knows focused on one thing. The holdco model appeals to those who prefer capital allocation over operations, but diversification often underperforms concentration.

What types of businesses work best for acquisition?

Podcast guests consistently mention boring businesses with operational complexity: egg cartons, self-storage, specialty packaging, franchise concepts, home services. The common thread is recurring revenue from essential services, limited competition from venture-backed disruptors, and complexity that creates barriers to entry. Distressed D2C brands offer a different opportunity—buy cheap, fix operations, flip to strategic buyers.

How does acquisition compare to starting from scratch?

Starting a business means building customers, revenue, and systems from nothing. Acquisition means paying for what already exists and improving it. The trade-off involves upfront capital (or debt) versus time to first revenue. Sarah Moore went from zero assets to a multi-million dollar business in 18 months. Building the same business from scratch might have taken a decade, if it succeeded at all.

Sources & Episodes

Related: Boring Businesses | Sweaty Startups | Holding Companies | Private Equity | SBA Loans | Franchise Investing | Andrew Wilkinson | Nick Huber | Alex Hormozi | Sam Parr | Shaan Puri

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