Buy Then Build by Walker Deibel ## Part 1: Don't Start a Business - The Alternative of Acquisition Entrepreneurship When you think of entrepreneurship, the typical image that comes to mind is that of a startup founder, pouring their heart and soul into building a business from the ground up. However, this path is fraught with risks and uncertainties. In my book, "Buy Then Build," I present a different approach – one that skips the startup phase entirely and jumps straight into owning a profitable business. Acquisition entrepreneurship is about purchasing an existing business rather than starting one from scratch. This strategy offers immediate access to an established customer base, cash flow, and a proven business model. It allows you to bypass the challenges of building infrastructure, securing initial funding, and navigating the perilous early stages of business creation. For instance, I began my entrepreneurial journey by acquiring a printing business. This move allowed me to start with a solid foundation, avoiding the common hurdles that new businesses face. The business was already generating revenue, and I could focus on growth and expansion rather than survival. ## Part 2: Engineering Wealth - The Connection Between Business Ownership and Wealth Creation Business ownership is a powerful path to wealth creation. Statistics show that a significant percentage of millionaires own their businesses. Acquisition entrepreneurship combines the roles of entrepreneur and investor, offering a unique opportunity for wealth building. In "Buy Then Build," I emphasize key investment principles such as return on investment, margin of safety, and upside potential. These principles are crucial for evaluating potential acquisitions and ensuring that the business you buy has the potential for long-term growth. For example, when evaluating a business, it's important to look beyond conventional industry standards. Focus on the growth possibilities and the profits as determined by the seller's discretionary earnings or cash flow. This approach helps you identify businesses with strong financial health and growth potential. ## Part 3: Defining the Target and Evaluating Opportunities To successfully implement the "Buy Then Build" strategy, you need to define your target clearly. This involves creating a personalized target statement based on your strengths, limitations, and strategic goals. In the book, I outline four business models for post-acquisition value building: product, distributor, service, and online businesses. Each model has its unique characteristics, and identifying the right one for you is crucial for refining your search. When determining the target size, focus on Seller Discretionary Earnings (SDE) for a clearer understanding of cash flow and acquisition price points. Industry type is also important; a broad assessment of industry types such as manufacturing, distribution, or service can facilitate a more effective search. For instance, if you're interested in a manufacturing business, you need to assess the industry's growth potential, the company's market position, and its financial health. This thorough evaluation ensures that you're making an informed decision that aligns with your strategic goals. ## Part 4: Deal Making and Financing - Navigating the Acquisition Process Once you've identified a potential acquisition target, the next step is to bring the deal together. This involves managing relationships with banks, brokers, sellers, and potentially partners. Building a strong team and understanding the acquisition process are critical, as deal making is not linear and requires early action for future success. Financing acquisitions is a key aspect of the process. While paying all cash might seem safe, leveraging loans can significantly enhance your return on investment. Many experienced investors prefer partial debt to maximize their returns while acknowledging the associated risks. When considering financing, it's often beneficial to request the maximum amount possible from your bank to ensure you have adequate capital when needed. Brokers, motivated by the potential profits from finalizing deals, might push for a transaction that could risk not achieving the maximum sale price. Therefore, it's essential to demonstrate your fiscal robustness and engage in thorough evaluations to secure the best deal. ## Part 5: Transition and Leadership - Assuming the Role of the New CEO After the acquisition, the transition phase is critical. This is where you navigate the final stages of concluding the firm acquisition and effectively assume the role of the new CEO. Planning, controlling last-minute worries, and doing due diligence are emphasized throughout this phase. It's crucial to maintain a growth mindset, as described by Carol Dweck, and to view exertion in a positive light. This mindset allows you to gain insights from your efforts, surmount obstacles efficiently, and achieve the highest degrees of achievement. Adapting to a flexible mindset is crucial for personal growth and effective leadership when confronted with challenges. The book provides business founders with the essential abilities for dynamic leadership, promotes learning from mistakes, and refines problem-solving strategies. For example, during my transition into the printing business, I had to navigate various challenges, from managing existing staff to implementing new growth strategies. By maintaining a flexible mindset and focusing on continuous improvement, I was able to overcome these challenges and drive the business towards significant growth. ## Part 6: Execution and Ongoing Improvement - Sustained Growth Through Acquisition Entrepreneurship The final phase of the "Buy Then Build" strategy involves execution and ongoing improvement. After acquiring the business, it's essential to implement growth strategies and foster organic growth alongside strategic acquisitions. This involves focusing on financial management, sales and marketing strategies, and the crucial role of innovation in scaling up. Establishing key performance indicators (KPIs) and creating a robust strategic plan are vital for driving growth and ensuring sustained success. In conclusion, the "Buy Then Build" strategy offers a powerful alternative to traditional startup entrepreneurship. By acquiring an existing business, you can skip the early growing pains and start with a solid foundation. This approach provides immediate access to an established customer base, cash flow, and a proven business model, leading to faster wealth building and a higher success rate. Remember, acquisition entrepreneurship is not just about buying a business; it's about building a sustainable and profitable enterprise that can grow over time. By following the principles outlined in "Buy Then Build," you can outsmart the startup game, live the entrepreneurial lifestyle, and reap the financial rewards of ownership now.

Here are the key insights from "Buy Then Build" by Walker Deibel: ## Acquisition Over Startup - Instead of starting a business from scratch, acquiring an existing business with positive cash flow can bypass the high failure rate of startups (around 90%) and offer a 95% success rate. ## Immediate Profitability - Acquiring a business provides immediate access to an established customer base, cash flow, and a proven business model, allowing you to focus on growth rather than survival. ## Wealth Creation - Business ownership, particularly through acquisition, is a powerful path to wealth creation, as it combines the roles of entrepreneur and investor. Many millionaires have achieved wealth through business ownership. ## Target Definition - Defining your target business involves creating a personalized target statement based on your strengths, limitations, and strategic goals. This includes evaluating business models such as product, distributor, service, and online businesses. ## Financial Evaluation - Focus on Seller Discretionary Earnings (SDE) to understand cash flow and acquisition price points. This approach helps identify businesses with strong financial health and growth potential. ## Financing Strategies - Leveraging loans can enhance return on investment. Requesting the maximum amount possible from your bank ensures adequate capital, while acknowledging the associated risks. ## Deal Making and Team Building - Building a strong team and understanding the acquisition process are critical. Deal making involves managing relationships with banks, brokers, sellers, and partners, and is not a linear process. ## Transition and Leadership - The transition phase after acquisition is crucial. It involves planning, controlling last-minute worries, and doing due diligence. Adopting a growth mindset and flexible leadership are essential for overcoming challenges and driving growth. ## Execution and Growth - After acquisition, focus on financial management, sales and marketing strategies, and innovation to scale up. Establishing key performance indicators (KPIs) and a robust strategic plan are vital for sustained growth and success. ## Creative Opportunities - Acquired businesses offer opportunities for creative innovation and growth. You can use existing cash flow to invest in new technologies and leverage the existing customer base for further growth. ## Broker and Seller Relations - Understanding the seller's perspective and working effectively with brokers can result in better deals. Brokers help in searching for businesses, acting as intermediaries, and keeping the deal moving forward.