50 Tools for Veterans Buying a Business

After I published 100 Tools for Veteran Entrepreneurs I got a lot of great feedback and figured I would do one specifically focused on Entrepreneurship Through Acquisition (ETA), or simply, buying a business.

1. The narrative around entrepreneurship in the United States mostly goes like this: “An entrepreneur is someone who starts a tech business, raises a bunch of venture capital, and exits it years later for millions and millions of dollars.” Yes- that happens, but it is not the only way.

2. ETA is where an entrepreneur acquires an existing business. While growing the business is obviously desirable, the strategy can also work by keeping the business more or less functioning as it was prior to the acquisition.

3. Acquisition entrepreneurs are usually attracted to buying a business first because it has already gotten past the startup stage and is generating profits. They can then try to grow that business, keep it as is and enjoy the profits, or reinvest the profits into new opportunities.

4. A term often used to describe someone looking to acquire a small business is a “searcher.” You will see that term a lot in this list.

5. There are two primary strategies for buying a small business: the funded option or the unfunded option. In the funded options, you raise a small fund (typically $300-500k) from a group of investors to cover your expenses while you search for a business to buy. Once you find the business, they help cover the acquisition cost. In the other model, you do everything out of your own pocket, raising money from investors at the end. In the funded, often called the “traditional search” model, you give up more equity but have less risk than the “self-funded search” model. There are a lot of considerations in this decision and there is no perfect answer for anyone.

6. Each of these strategies has their pros and cons. To learn more about the outcomes and experiences of each, you can look into the Stanford Seach Fund Primer for the traditional method, and Search Investment Group’s Self-Funded Search Study.

7. The primary way most self-funded searchers finance their acquisition is with a 7(a) loan through the Small Business Administration (SBA). You can use this loan to finance up to $5 million for buying a small business. It also has some advantages to regular commercial loans, as it has a longer pay-back period, which lowers your monthly payment, and does not have any requirements other than making payments.

8. To note, this loan does require a personal guarantee, meaning that the bank could potentially come after your personal wealth. While this sounds scary, it is a risk that can be managed. You can learn more about the risk of defaulting here and note that the rates of default are much lower than you probably think.

9. It’s worth noting that while your local bank or the name brand bank you know of may offer this loan, the top SBA 7(a) lenders are likely banks you haven’t heard of like First Internet Bank, Byline Bank, or Live Oak. These loans do have some unique nuances, so it is typical to work with a lender experienced in this space. You can find a list of the top SBA lenders HERE.

10. For a small acquisition or to fund a franchise, you may even want to use the SBA Express loan, which can be used for loans up to $500,000 and typically has fewer requirements and thus a faster processing period.

11. Searchfunder is the LinkedIn for people who want to buy a business, investors, and all the bankers, accountants, and lawyers you will need. I know a veteran who went on there, posted that he wanted to buy a business, connected with an investor, and, six months later, owned a small business. Don’t let the monthly fee discourage you. All you need to do is post or comment and you get 30 days free (and it adds up, maxing out at a year).

12. You can also learn a lot about ETA through Jim Sharpe’s (investor and educator) blog.

13. If you want to talk to investors for a traditional search fund, Anacapa Partners is one of the biggest investors out there and they have a veteran on their team.

14. You can also find other options on this list of Top 7 Search Fund Investors for SMB Acquisitions.

15. You may be doing this for the first time, and that is OK. You are likely going to hear terms and phrases you have ever heard before (I’m convinced finance professionals make up terms like pro forma and parri passu to deliberately confuse people). Ask questions. Google terms. Look on YouTube. As they said on the X-Files, the truth is out there.

16. Veteran Business Project was founded by a Vietnam veteran and helps veterans start or buy businesses, sometimes even connecting them with owners looking for a veteran to sell to. You can listen to my podcast with him HERE.

17. Not sure what to do with your Thrift Savings Plan after the military? You have a few options, but many don’t know you can use those funds to help you buy or start a business through the Rollovers as Business Startups (ROBS) option.

18. Franchises love veterans. You can check out Vet Fran to find franchises that have special deals, including discounts on franchise fees, for veterans who want to build a franchise.

19. There are even a few franchises founded by veterans that look to specifically franchise to other veterans such as J Dog Junk Removal, VetCor, or G Force.

20. The Wolf of Franchises is a newsletter run by a franchise industry veteran who publishes in-depth research on new franchise opportunities. You can sign up for free HERE.

21. The Franchise Disclosure Document (FDD) is a legally required document that details many of the important facets of a franchise. You can lead the nuances of reading one on an in-depth article from the Wolf of Fracnhises HERE.

22. You can also check out Krokit, a helpful data platform that breaks down the performance of various franchisors.

23. DON’T PAY FOR AN FDD! There are a few states where you can look them up for free. They include Wisconsin, Indiana, California, and Minnesota.

24. Many people in the ETA community love working with veterans. Here is some feedback from a lawyer who specializes in helping entrepreneurs buy businesses:

25. You can connect with other veterans and learn more about ETA at Veteran ETA.

26. If you want to learn more about this, the two books EVERYONE will recommend to you are Buy then Build and The Harvard Business Review Guide to Buying a Small Business.

27. The author of Buy then Build, Walker Deibel, also has a program called Acquistion Lab that provides coaching and support to people looking to buy a business.

28. Acquira is another program focused on helping people acquire businesses.

29. If you have never created a model for a leveraged buyout, Wall Street Oasis offers a class that walks you through how to do it. Acquiring Minds also has a series of webinars that can guide you through modeling and raising money from investors to buy a business.

30. But if you want to skip ahead, you can look at where to find businesses for sale.

31. Business broker Clint Fiore also does a great job of highlighting some popular techniques here:

32. You can also use some creative methods to find companies for sale. Benn Tiggelaar (a former podcast guest) describes a technique using publicly available PPP loan data here:

33. There are also some really great podcasts out there about buying a business. Acquiring Minds, Acquisitions Anonymous, and Think Like an Owner are the biggest.

34. Acquiring Minds even has a whole playlist on their YouTube channel of interviews with veterans who bought a small business.

35. You can also check out my podcast, The Veteran (Semi) Professional, where I have 200+ interviews with veterans who started, bought, or ran a business.

36. You should definitely look into government contracting. There are many small contractors out there that are owned by a veteran and have contracts that depend on the owner being a veteran. That means when the owner wants to sell, they basically have to sell to a veteran. That is where you come in.

37. In fact, I wrote a whole Twitter/X thread about how veterans can find these businesses:

38. Before you say, “I’m not on Twitter/X” let me go ahead and tell you that if you want to buy a business, it’s a great place to be. In a conversation with another searcher, he said to me, “I learned more about ETA from two months on Twitter than I did in two years at business school.” Are there some VERY distracting corners of that app? YEP. But find the right people in #smbtwitter and you can learn a lot.

39. It’s important to remember that searching for a business is not the purpose here. Running one is. Searching may take a matter of months while running the business could be done for years. Don’t lose focus on that end goal.

40. You can also reach out to a business broker. For a GIANT list of the business brokers in the US, look HERE.

41. You may also want to go straight to the business owner, but now that this sounds easier than it actually is. RocketReach is a tool you can use to find their contact info.

42. To create a website for your search, check out this great article from ETA legend, Jim Sharpe: Building Your Search Website

43. When it comes time to find a lawyer or hire an accountant to check the books of a business, you may want to look into DueDilio.

44. When it comes time to raise money, you can check out this list of 19 Places to Find Investor Money for Veterans.

45. Or check out this list of self-funded search investors from one of the big names in the space, Sam Rosati (who likes to invest in veterans himself). You can also look into the tech-forward, Mainshares.

46. Or ETA Investor Network or Slackwater Capital or ETA Club.

47. You can also connect with investors, lenders, and others in-person at conferences focused on buying small businesses. These are usually run by business schools but there are other options out there as well.

48. You could go to the ETA conference at Rice, Harvard Business School, MIT, Babson, Stanford, Booth/Kellogg conference, Wharton, Michigan Ross, or the Southeast Entrepreneurship Through Acquisition Conference

49. Or go to one that is not affiliated with a business school like the Self-Funded Search Conference, SMBASH, Hold Co Conf, Capital Camp, orMain Street Summit.

50. If you don’t want to do a self-funded search, know that there are a few options for pursuing a traditional search fund. You could go about it on your own and piece together your fund from a number of investors or you can go to a “single-source” fund like Broadtree Partners, WSC and Company, orSearchfund Accelerator.

Go crush it.

Mark

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