Judd Goodrich

Who has bought or runs a small business and lives in Austin? Doing something cool next week that you may want to be a part of!

Over 2M small businesses will change hands or shut down as Baby Boomers retire. We need more owners in the USA economy. It's in our Founding DNA. It's core to liberty. Learn what Will Fry is building, and why this is an underappreciated opportunity, especially for young people!

Yesterday was a big milestone. Inside this 18-wheeler were 2 pallets of baseball bats. These are not your average bats. These bats are manufactured with care by our proud American small business partner, POM Industries. In addition to manufacturing self-defense products, @CarusoA7 and his team have offered to help us manufacture Main Street-defense products. This product line is anchored with our "Not For Baseball" baseball bat. It can be used to defend your business from NOT private equity roll-ups, NOT overregulation, NOT Chinese copycat manufacturers, NOT smash-and-grab hoodlums, etc. There is a reasonable argument that every small business in America should have one of these behind the counter. There is also a reasonable argument that this is just a bat. Both of these things can be true. You can grab one at the link below for a very special price. We recommend buying two - one for the office, one for the truck. ***** I have been advised by counsel to say these are SOLELY decorative and you should take "NOT" literally and NOT skip over it. We bear no liability for your use of a baseball bat.

Nearly half of America's small business owners are 55 or older. Most don't have a succession plan. These aren't just businesses. They're decades of relationships, reputations, and community wealth built by hardworking men and women pursuing their American Dream. When they close without a local successor, that all slowly disappears. This doesn't just impact the owners. It impacts their employees, customers and communities. Fox Business covered the problem this week, and the role American Operator is playing in solving it. Story below

@follard Incredible work Foley!!

The 365 day challenge of 20k steps EVERY SINGLE DAY has officially been accomplished. I feel a tremendous sense of gratitude to be able to move my body every day! Consistency trumps all. No stopping me in anything I set my mind to. Let's build! 🛠️ (ps: victory cig? 🚬)

On the first American Operator Podcast episode of the year, I shared how we’re paving a new path to ownership, and why it matters for reviving the American Dream. JC and team has a big lineup of great guests coming this year! You can subscribe on YouTube, Spotify, or Apple Podcasts by searching American Operator Podcast.

@BoilerPlateCPA Industries

I built an analysis of the 50 best and WORST industries for acquisition in 2025. 50 industries. 20 factors. one ranking per industry. To get a copy of the analysis, RT and comment "industries"

My buddy texted me at 11pm last night: "Guess who's fixing a walk-in freezer?" Ex-IB guy, super successful. Harvard MBA. Could probably recite DCF formulas in his sleep. Now he owns a commercial HVAC repair company with a handful of employees and has apparently learned how to diagnose beginner-level refrigeration equipment problems. I asked him if he regrets leaving Wall Street. He laughed. "Dude, I make almost as much money as I used to, I set my own schedule even if it’s 50 hours a week, and yeah, sometimes I fix freezers, but it’s fun working with my hands and I’m just trying to enjoy it while it lasts [before we grow].” I know everyone warns searchers to not buy too small (honestly it’s good advice). But even if you’re buying yourself a job, that job can be super rewarding depending on your attitude. And I’m certain he’ll grow it to $10M+ revenue if that’s what he wants to do. Reminder to know the game you’re playing, SMB ownership looks different for everyone.

I pulled some data last night on a semi-surprising deal killer from the last few years.. The data is a bit soft here. It’s subject to all the intricacies of deals failing, of which there are hundreds of overlapping reasons. But a large deal killer was sellers backing out after LOI. Here's what I think is happening: A decent amount of sellers aren't actually ready to sell. They think they are, but when the process gets real and you start asking for documents and verifying their numbers, they realize this isn't as easy as they thought, and likely that their business isn’t worth as much as they thought (likely due to brokers anchoring the sellers to an overestimated purchase price). Unfortunately for searchers this means all the hard work of getting that deal under LOI, spending lots of time and money in the first 30-45 days wrangling investors and conducting due diligence, just for the bottom to fall out because the seller wasn’t actually ready to sell in the first place. My opinion on the solution for searchers here isn't to make due diligence easier. It's to set better expectations upfront. The best buyers I know create a timeline document that walks sellers through every step of the process. - What documents they need and when they’re needed. - Each phase of an acquisition and how long they are. - Likely sticking points (ex: bank underwriting) And they’re honest about how much work it's going to be. Instead of saying "don't worry, we'll handle everything," they say "this is going to feel like a second job for the next few months, it will get pretty intense, but here's exactly what we need from you and when to get this done on time. Sellers appreciate that kind of honesty, and they’re less surprised when things start to become overwhelming. If anyone has any advice on “how to break the bad news to sellers about their business valuation” I’m all ears.

Every time someone shows me a model with 35% IRR, I get a little skeptical. Not because it's impossible, but because I've seen too many models that don’t reflect a realistic first 1-3 years after acquisition. They always follow the same pattern: Year 1: "We'll grow 20% by improving operations." Year 2: "We'll expand into two new markets." Year 3: "We'll add this new service line..." The reality I've seen is usually more like: Year 1: Figuring out how the business actually works, building relationships with the team, and fixing a lot of broken things. Mostly surviving. Year 2: Everything is starting to hum, finally improving/implementing big things. Still fixing things that are broken. Year 3: Finally able to really make some moves. My rule now is to build the model assuming everything takes twice as long and costs twice as much as you think. If the deal still works with those assumptions, you might have something great. If you need everything to go perfectly to hit your return targets, you're probably paying too much for the business.

Here’s 22 strong opinions and insights I have on buying businesses: - Most searchers undercapitalize their deals, make sure to get a line of credit at close. If it’s an asset purchase, working with a bank for the first 2 years after acquisition will be extremely difficult (you haven’t built a credit history yet) - Your efforts as a searcher compound, many sellers will reply to an email you sent 9 months ago because the timing is better - Lots of buyers get a deal under LOI above asking price, with a plan to retrade later. Sellers get tired of this after 2-3 times and start to prefer more reasonable, relational, honest buyers with a higher certainty of close. - Installing software, systems, and processes takes significantly longer than you expect it will (like 4x longer) - Searchers need a much larger runway than they think they do, 1 year is not enough - Searchers would be wise to create an alternative approach to reaching out to sellers, most sellers are getting someone reaching out to buy their business every day. 4 years ago this was not the case. - Creating a strong relationship with the seller pays DIVIDENDS after you close. - If you plan to hire a GM/Operator quickly after acquisition, it probably won’t work on your first go-around - Most successful buyers I’ve spoken with have said “I should have let go of [problem employee] way sooner than I did” - The J-curve will hit you in many unexpected, immeasurable ways. Make sure you have a good cushion - Niche businesses have less buyer competition than businesses like plumbing, HVAC, accounting, etc. - SMB investors invest in the operator first, and the deal second - When you buy a business doing <$1M in EBITDA, you’re almost always buying a job for 1-2 years. This isn’t a terrible thing.. Just BUILD!! - If a seller claims to be “hands-off,” assume they’re more involved than they admit. And that you will not have that luxury when you acquire the business. - Business brokers are marketers, not accountants. Get a QoE and verify everything, make few assumptions. - Raising equity will take longer than you expect, start early or risk losing the deal. - Employee turnover post-close is inevitable, voluntary or involuntary, plan for it. - When a seller tells you their reason for sale, keep investigating, “retirement” can also mean “this industry is about to get rocked” - Good operators with bad deals often outperform bad operators with good deals. Focus on your fit as much as the business’s numbers. - Buying your 2nd business is 10x easier than your 1st. Your reputation and network start working for you. - Most regional banks writing their first SBA loan in 10 years have no idea what they're doing, and are extremely challenging to work with. - You’ll have to do some amount of “selling your business” education for the seller. Come to them with some materials they can review on timeline and action items from LOI to close. What’s worth adding to this list?

Just got off the phone with an acquirer getting served with a healthy portion of the “J-curve Special” Without getting into their specific situation, here's all the different ways a J-curve can hit you when buying a business: Measurables: 1. Employee turnover You’ll make your own fires, and some employees will leave on their own. The gap between the date they leave and the date you have someone trained and working costs you money. 2. Replacing the seller It can often take 2-3 other employees to completely replace the job the previous owner was doing every day. If you ever wondered how a seller is maintaining 20-30% margins with an efficient team, it’s because they’re usually doing the job of multiple people. 3. Capex investments This happens all the time in a blue collar business, some large piece of equipment was overdue for maintenance and breaks (in excess of the monthly P&L statement for maintenance and repairs) $5,000 here… $10,000 there… For some reason I’ve seen this consistently in companies with a fleet of vehicles or heavy equipment. 4. Tech Improvements As you invest in software, employee tools, etc, you’re spending more money with the idea that efficiency will increase capacity and profit. It will do that in the future with time and training, but in the near-term it costs money. 5. Churn A number of customers will churn when they hear about new leadership, from my experience it’s usually not too large, but it’s worth considering. Immeasurables: 6. Your personal learning curve Running the business day-to-day reveals complexities you never saw. Every customer call teaches you something new about problems you didn't know existed. 7. Seller is gone The seller had 20 years of institutional knowledge, they knew which customers always pay late, how to get the best discounts from vendors/suppliers, how to handle equipment when it acts up. All of that walks out the door with them. 8. Seasonality mistakes Being 2 weeks too late to hire seasonal workers or 2 weeks early to lay people off can cost you tens of thousands of dollars. The seller knew these rhythms instinctively, you'll learn them the old fashioned way. 9. Your own expectations of your ability to run the business Buyers usually come into a business overestimating their ability to add value. Even with “relevant” corporate experience, you’ll find only a small amount of it translates to new role day to day. 10. Breaking systems to build them better The seller's "system" of handwritten notes and Excel sheets actually worked for them and even their team. You need to break these systems to build them better, but breaking them can lead to misquoted jobs, missed leads, and a ton of other unpredictable problems. I think this is the unsaid part of the J-curve. It’s not as simple as “costs often rise faster than revenues.” It can be really unpredictable. But you’re better off expecting it rather than being surprised by it.

A lot of business buyers fail in their search for a very simple reason, and it’s not what you think. It’s their industry selection. I see it all the time. A first-time buyer reads Buy Then Build, listens to a few podcasts, scans some search articles, and ends up deciding to chase the same handful of industries everyone else is chasing. Plumbing, HVAC, accounting, etc. Nothing wrong with these industries by the way. But I do think that too many buyers walk into these same handful of industries haphazardly, without recognizing some problems they’ll face acquiring into an industry they usually don’t have experience in: Common problems: 1. The search will take longer, establishing credibility and building a relationship with a seller or broker is challenging without a strong reason why you should be considered as a buyer (besides your bank account) 2. The learning curve of acquiring a business you have no experience in will be much longer than you think. 3. Likelihood of failure is much higher when you don’t understand the market dynamics 4. Everything else - building investor trust, due diligence, deal structuring/negotiation, all much harder when you don’t understand the industry I don’t want to just say “all searchers should acquire into an industry they already know and understand.” That’s not where I’m coming from. But I do think many searchers could set themselves up for success better if they took a step back and intentionally thought about a few target industries that they are best suited to acquire into. So what does thoughtful industry selection look like? 1. Identify your unfair advantages This doesn’t always mean direct work experience. Maybe you’ve built a career in sales and can thrive in industries where customer relationships drive value. Maybe you have investors/mentors with decades of operating knowledge in a sector. Maybe you have a personal network that gives you an inside track on talent, suppliers, or customers. The point is, consider the edges you already have. 2. Consider your operator lifestyle Remember, you’re going to run this business for at least a few years. Numbers on a spreadsheet don’t tell you what running the business will feel like. Will you be okay with 6 AM start times? High employee turnover? Slow-moving B2B sales cycles? Your happiness and energy impacts the operation of the business regardless. So buy something you’re mostly content with, especially when you hit lulls and downturns. 3. Think about credibility to brokers, sellers, and investors Does your target acquisition help you or hurt you get others attracted to your offer? If it helps you, the search process is going to be much easier and likely to succeed. You’ll have a better time getting sellers and brokers to talk to you, and investors will be more attracted to fund your equity raise. If your track record and skills don’t align with the acquisition, you’ll get the opposite result.

What LPs actually want (but rarely say) in SMB investing: I spend a good portion of my day talking with investors. - family offices - angels - funds - HNWIs All who are curious about allocating into SMB acquisitions. If you ask them what they’re looking for, the standard answers come up: “Strong returns.” “Low default risk.” “Capable operators.” “Cash flow yield investments” Of course those matter. But what LPs rarely say out loud is that they’re searching for trust, governance, and visibility. Most LPs have been burned before. They’ve backed a fund where distributions never showed up, or put money into an operator who went radio silent after cash flow collapsed. Most experienced LPs have lost tens or hundreds of thousands of dollars in one way or another, and every bad investment they’ve made has taught them a different lesson about selecting and managing deals they invest in. When they look at SMBs, they’re not just underwriting the business. They’re underwriting the operator’s judgment. They want to know: - How quickly will you tell me when things go wrong? - What recourse do I have if covenants are broken? - Can I see what’s happening in plain language, not just in a quarterly memo? Returns are table stakes. Predictability is the differentiator. I think this is where SMB M&A still lags behind more mature asset classes. In PE, there’s governance frameworks, reporting standards, board structures. In SMB, most deals are still bespoke. So many of them are still handshake deals disguised with paperwork in the middle. (by the way, these are problems we’re fixing at @mainshares - standardized investor terms, governance, reporting standards, etc.) So if you’re raising capital as a searcher or operator, here’s a practical takeaway: Know what your investors want to see (even if they won’t ask for it), and give it to them early. - clearly articulate the cadence and structure of standard reporting - offer investor protections that go beyond boilerplate - write an FAQ section that communicates answers to “What Ifs?”... like What if a key customer leaves, What if working capital falls below an established threshold, … etc. More investors will be comfortable with your deal if you can predict their concerns and get ahead of them before they have to ask. And a question to investors reading this: What are most searchers missing in their decks right now? What information do you want to see that you’re constantly not seeing? 👇 Drop your thoughts below.

Before you buy a business, talk to someone who's already acquired in the same industry. Talk to someone who has already traveled the same path you’re traveling, already taken the same risk you’ll take, and seen “the other side” of the acquisition. Some reasons why: 1. They’ve seen the skeletons in the closet Every acquisition has an expectation and a reality. An expectation of what acquiring and running a business is like (before the acquisition) and then discovering the reality (after the acquisition) Talking with someone who’s done it before can help you bridge the gap between what your expectation is and what will likely happen after you acquire. 2. They can help you in due diligence There are always these little nuances in an acquisition that only become obvious after you've done it. An experienced operator knows which line items in a P&L are most challenging, and they’ll know how you can discover problems that are impossible to see on a financial statement 3. Negotiation They can help you in the negotiation. Especially when it comes to establishing terms that set you up for success, like: - how to handle AR and inventory - how to structure the seller's transition period and seller availability post-close - how to structure an earnout or seller-note contingencies 4. Ongoing operations You and this person will likely stay in contact for a very long time. There’s a certain personality trait and ambition it takes to acquire a business, and you’ll have that personality in common. Additionally, you’ll be sharing highly relevant industry-specific information with each other, and your businesses will mutually benefit from regularly sharing insider information with another operator running experiments, making mistakes, and improving their business. So how do you find these people? - @mainshares operator network - Industry/ETA conferences - local meetup groups - Ask your brokers/lenders for introductions to past buyers What to say: Hey ____, I’m actively searching to acquire a [business niche] and have submitted a handful of LOIs so far, I saw you acquired ____, and I have a [specific topical question], would love some help here and will happily pay you for the time. Be willing to pay for people's time, but most won’t take you up on the offer, they’ll help for free because they likely also had help along the way. And be specific at the start, no one enjoys “coffee chat” phone calls. Then build a relationship from there. It really is that simple, the ETA community is incredibly helpful. The worst case here is you waste a few hours on phone calls with a handful of people. The best case (and very realistic) is that you save hundreds of thousands in avoiding mistakes, save yourself hundreds of hours of wasted time, and find someone you’ll trade notes with for years.

How to spot a seller lying to you in your acquisition: But before I start, let me say this: “Lying” can be interpreted broadly in a nuanced negotiation like an SMB deal. - Sometimes it’s a direct, fraudulent lie. They’re telling you something they know isn’t true. - Sometimes it’s a half truth. You ask them about their day to day activities and they say “I’m barely involved.” But you discover they’ve opened the doors every morning for the last 20 years and still work 10 hours a day. Some sellers believe they don’t work much, because they compare it to how much they worked when they were younger. - Sometimes it’s a blind spot. You might ask “what was your growth rate last year” and they say “Around 12%”. But in due diligence you discover it’s 6%. So did they just lie to you? Or were they simply wrong? Maybe they misremembered that number from a different year? If I were a searcher, I would walk into an acquisition knowing that at LEAST several times in due diligence, the seller will at minimum be incorrect about information presented to me. (again, it’s usually not malicious) I mean, it’s due diligence, you’re about to ask this person 1,000 questions, most of which they’ve rarely been asked. It’s natural for them to give you a variety of imperfect answers. Still, these mistruths can cost you hundreds of thousands of dollars in an acquisition. Here’s a couple tactics you can use to get truthful information from a seller: 1. Ask about specific past events, not hypotheticals Don't ask: "What happens when you take vacation?" You’ll get a hypothetical response, which is almost always prettier than the real thing. Instead ask: "When did you last take a week off? Who handled things? What went wrong?" It's much harder to paint a rosy picture of something that actually happened. 2. Use the "Would You Rather" technique In early conversations with a seller, you’re going to want to sniff out what they value most in a transaction. - To get their Price/Terms? - To get their ideal exit timeline? - To find their ideal buyer persona? If you ask them, they will want all 3. Instead, ask questions that frame these values as tradeoffs, you’ll get a clearer picture of their goals as a seller. Example: "Would you rather get your full asking price but wait 12 months, or take 10% less and close in 60 days?" 3. Ask the same question in different ways at different times. Keep track of their answers. Most people have a very hard time keeping track of lies. The more times someone responds with the same answer, the more likely it is to be true, so ask the same question multiple times. “Has the business ever paid for any of your personal expenses?” “How often do you pay for meals using the business card?” “Do any of your vehicle expenses run through the business?” Ask the same question, multiple ways throughout DD. Those are a few tactics searchers we’ve supported have found helpful. As always in due diligence — trust but verify.

Yesterday I spoke with someone who acquired 6 different plumbing businesses within 2 years of his first acquisition. Most of them were super small, $200k - $700k in annual sales. Deals were done with a small amount of cash + huge revenue sharing based earn out, no bank debt. I have a few notes on these tuck-ins and when you should consider buying these tiny companies… 1. There’s not many buyers for businesses as small as these. They’re too small for a searcher looking for a platform, too small for a PE add-on, and even too small for an operator doing >$3M in sales. 2. These deals are pretty easy to close on. - The purchase price isn’t too consequential for the seller’s retirement - They prioritize speed to exit instead of price - The purchase agreements are relatively simple, a lot of the time you’re just buying a website, phone number, email address, and a couple pieces of equipment - they are very custom, the buyer gets to choose if they bring employees over, which assets they pay for, which assets get liquidated, etc 3. These acquisitions are usually affordable Because of the few points above, you’ll usually assign a discounted rate to the value of a phone number/website/customer list, equipment, etc. The value of the business is usually paid with cash for those assets, and maybe an earnout/rev share agreement generated from the leads of that business. No bank involved 4. There are tons of these deals, and some of the time, they come to you. I think statistically, 70%+ of SMBs are doing less than $500,000 in revenue. They are plentiful. If you’re networked well in your area, your name will casually be tossed around in conversations with other business owners, and when a prospective seller hears that, they may approach you directly. 5. For most of these acquisitions, you should offer a deal to the sellers that only makes sense for you, and be comfortable walking away if negotiations get more complicated. That statement is true for any acquisition, but in this case the buyer wins if they get a great deal, and the seller wins if they exit quickly. 6. Seller involvement Most sellers will want to limit their time transitioning the business. If you can limit that amount of time to a few week and just get control of the purchased assets, that’s valuable to most sellers. I’m speaking generally of course, some of these sellers might actually want to work as a technician for a few years before they officially retire. Many different circumstances exist. 7. Integration time Keep in mind that this is an acquisition, and you will need to prepare for what comes after signing a purchase agreement. For example, inbound customers will be expecting that the seller picks up the phone, when someone else answers it will be a surprise and you should be ready for that. The same person I spoke with who bought a bunch of these tiny companies told me this: "I'm the only buyer most of these sellers ever talk to. I make offers that I know will win no matter what happens, and I close fast." I didn’t ask him this, but I bet he uses Chat GPT to draft legal docs because paying $5k - $10k isn’t worth the investment. And more so deals of this size usually aren’t worth litigating over (unless they’re totally fraudulent, which you should still investigate in a due diligence period). Would love to hear from others though. Have you acquired a tuck-in? Was it worth it? Will you look at tuck-ins in the future?

There is almost no information on how to invest in small businesses, so we’re building it. It’s funny If you look up “How to Buy a Business” you’ll be flooded with courses and guides which almost always have information on how to raise money from investors. But there’s practically no information out there for investors on how to invest. I took a recent look at our investor base and found that most people who’ve funded a deal fall into 3 categories: 1. They've done this themselves — bought a business, ran it, now they're investing 2. It's their job — they're in private equity or a family office and do this daily 3. They have relevant industry experience as former operators, limited investing experience But what about everyone else? - The RE investor who wants to diversify... - The tech executive looking for higher returns… - The successful professional who sees the opportunity in the great wealth transfer but doesn't know how to do it... They're stuck trying to piece together investment knowledge from podcasts and generic "how to buy a business" content. But there’s really no good place for them to go. So we spent 3 months asking investors we spoke to about their questions, gaps in knowledge, and things they didn't understand. Then we turned those questions and gaps into something that actually helps people get from 0-1. Introducing — our SMB Investing Masterclass. It's a 6-part series, and has ~2 hours of dense, specific content designed to give you the framework to evaluate and commit to your first deal. We cover everything from building your investment criteria all the way to the actual documents you'll sign when you wire money, and what to expect from your investment. Here's what we're tackling: Episode 1: Why the SMB asset class (and why now) Episode 2: Building your investment criteria Episode 3: Deal evaluation frameworks and scorecards Episode 4: Understanding risk and return profiles Episode 5: The investment process and documentation Episode 6: Post-investment monitoring and value creation It’ll include internal @Mainshares content, plus the collective wisdom from hundreds of investor conversations. The goal? By the end, you'll have the tools to look at any SMB investment opportunity and know exactly how to evaluate it, what questions to ask, decide if it fits your criteria, make an investment, then manage it. Most sophisticated investors either learned this the hard way through trial and error, or they had mentors in the space. We're trying to compress that learning curve for everyone else. If you’re interested in this, you should consider joining our Mainshares Investor Network, we’ve got 1800+ investors together sharing best practices on investing in SMBs. And we’re distributing this Masterclass there. Info on the investor network in the comments below

Who am I missing from this list? Drop your thoughts below - I'm always looking to improve the playbook.

Ideally, most of these people should be in place BEFORE you acquire a business. Start building relationships now. Buy them coffee. Ask smart, specific questions. Make it clear you value their expertise. When you find the right deal, you'll have a championship team ready to help you win it.

2. Multiple lenders Bid for multiple banks, get the best price/terms/most friendly, and get multiple options so you have certainty of closing your loan. I’ve seen some deals where a bank pulls out last second, despite all of the conversations with your lead rep saying “we’re almost at the finish line.” Avoid that mistake by working with multiple lenders. Or prompt your loan broker to get the process going with a few banks. And one caveat, some banks are great to work with, others are extremely difficult. Generally speaking, you should go with a top 10 SBA lender because after you close your loan, you may want to do something creative like a refinance. Working with a bank that doesn't have much experience with SBA loans is usually painful.