💡 Weekly insight

I'm three weeks into a deal that should be straightforward. Price agreed. Most terms settled.

But every new clause makes her more skeptical. She's never sold before, and my explanations sound like excuses to change the deal.

When I mention "net debt adjustment" and "working capital normalization," I watch her pull back. Not because the terms are unfair - because they sound like ways to cut her payout.

These are standard protections. We don't want to buy her company then immediately inject capital for payroll. If she has excess cash, she keeps it as dividend.

But to her ears, "adjustment" means "reduction."

The real problem is that we started the process with informal, friendly chat, and now I’m coming across as an M&A raider. Hopefully, we are able to turn it around this week and be able to close!

Why Buying Beats Building (Most of the Time)

"9 out of 10 startups fail within the first 5 years".

And still, that's the chosen path by most entrepreneurs. Why?

I understand the drive to build a brand new product that has never been done before. And for that - startups are the way to go!

But for many, the goal is to be rich. Or the paradoxical ambition to have more freedom (😂).

And if that is your goal you should consider an alternative approach.

Acquire a company that is already generating profits.

"But I don't have the cash for that"

Admit it, that is the first thing that popped into your mind.

My own shift in perspective

I used to spend years trading time for money as a consultant. It was fine. But I couldn't shake the question: why not use those same skills — strategy, operations, finance — to build something for myself?

And so I did. I started several companies. Consultancy agency, a tech company with unicorn ambitions, a corporate venture inside of a public company with severe domain expertise, and finally an accounting firm.

Let's look at the last one - the accounting firm. Why start from scratch?

We spent thousands of hours to get the company flywheel up and running. Writing processes, setting up systems, hiring and firing, finding offices etc.

And although these are interesting problems, we are burning cash every month for us to get this in place.

We also pushed for sales at the same time, but at some point you're running out of time.

When you acquire, you skip the most expensive phase - the buildup. The advantages stack quickly:

The accounting firm we could have bought instead? Day one revenue of €25k monthly from 80 existing clients. No waiting 18 months to break even.

Proven systems. Processes, software, workflows - all tested and functional.

Their client onboarding took 2 days vs our 2 weeks. Their tax preparation workflow handled 300+ returns annually. Their billing system had zero manual intervention.

Three senior accountants with 5+ years each. One office manager who knew every client personally. Compare that to our 8-month hiring process where we interviewed 40 people to find 3 decent candidates.

And making accountants chose an unproven firm instead of a company that has been around for 3-4-5 years? That also have a cost. Trust me!

Annual retainer agreements averaging €3k per client. Some relationships dating back 10 years. One client representing €8k monthly revenue - more than our entire first quarter.

No guessing about pricing or service mix. Clear proof that businesses in that region pay €300-500 monthly for ongoing accounting support.

Take the car wash we're acquiring. €200k annual revenue with about 40% margins. No people required - the business generates free cash flow from day one. We've identified uplift activities to boost both revenue and margin, and our payback time is 14-16 months. That's crazy good.

Then there's the plugin company we're buying. €350k annual revenue with more than 50% margins. We're adding it to one of our portfolio companies that has excess capacity to help develop the plugin and handle support. Plus we're seeing multiple ways to monetize the existing customer base - more on that later.

Both businesses prove their models work. No guessing about demand or pricing. The revenue is already there.

Hidden liabilities - old contracts, pending lawsuits, regulatory issues.

That lease the seller forgot to mention? The tax dispute from three years ago? The software license that auto-renews at double the rate? These surface after you've signed.

Cultural friction when your vision clashes with existing ways of working.

You want to modernize processes, they've done things the same way for a decade. You see efficiency opportunities, they see unnecessary change. Some will adapt, others will leave.

Key person dependencies where critical relationships walk out with the seller.

The biggest client only stays because of their friendship with the founder. The key supplier gives favorable terms based on personal trust. When those relationships don't transfer, revenue follows them out the door.

This happens all the time. And change fuels change. Make sure that key resources are committed!

Technical or operational debt that limits your ability to grow.

Legacy systems that can't scale. Outdated equipment that breaks down monthly. Processes that worked for 10 clients but fall apart at 50. You inherit years of "we'll fix that later" decisions.

Due diligence helps but doesn't catch everything. The difference is you're solving known problems with existing cash flow, not burning money hoping your idea works.

Back to that voice in your head: "I don't have the cash."

Think about how startups work. You start in the garage - time isn't really money at this stage. Build an MVP, get a couple of clients, then pitch investors for capital.

You can do the same with acquisitions. Except you already have the product and the clients. Instead of showing investors a prototype, you show them existing revenue and your plan to grow it. Much easier pitch.

But there are also ways to get companies cheap. Many owners just want someone to take care of their employees and clients. They might give it away for free or close to it.

Others offer seller financing - essentially loaning you the money that you repay with the business's excess cash over the next few years.

The real barrier isn't money. It's the mindset shift from creator to optimizer.

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