I considered buying this company.

A week ago, we did one of our first M&A diligence calls.

I’ve been using this newsletter to think out loud about switching from building companies to buying them.

Today, I’ll continue bringing you along with my process.

We probably won't do this deal, and I'm limited in what I can say, but I walked away feeling very excited about getting in the M&A game.

After 15+ years of being an entrepreneur and operator, I understand business and people very deeply.

At the same time, once upon a time I was an associate at Goldman Sachs, analyzing and investing in businesses.

As we went through the call, both personalities jumped out, and I was able to ask a ton of questions and dig into the heart of the business.

I'm sure I'm still a C- at it, but it felt like something I could become great at and would enjoy!

I asked a host of questions (Published for your benefit below!) and I texted friends to already start diligencing it DURING the call. I think I can win this game!

This business was crazy. In a niche, with a terrible website, and no one has heard of it. Yet, it was making $300k in PROFIT per MONTH.

It hit me.

The one thing about running Ampush for 10 years was that I had to focus only on my business.

IT happened that I had lots of clients in lots of different verticals, so I still got to learn about other companies, but all my strategizing was about Ampush.

In the world of M&A, there are thousands of people building thousands of businesses. It's fun and interesting to see what others have cooked up!

This hit me on the call.

The hardest part of a studio or a HoldCo is finding great people!

As we were meeting with this company, it struck me that buying and growing this company wouldn't be EASIER than starting a business, but it would be more CONSTRAINED.

See, when you start a company, there's a completely blank page. It takes a very unique energy to figure out what to do and how to do it.

But when you buy a business, it has a business model, customer type, team… there's just more structure and, I think, less risk.

I'd be more inclined to hire a young star to run it because the steps are more obvious/clear.

My goal was to understand what the business did, its unit economics, how its customer relationships worked, competitors, how important its product is to its customers, why they were selling, and a bunch of other areas.

[We started by telling our story + M&A experience.]

“That's kind of the quick context on our side. I would love to hear a little bit about your story.”

“Tell us what the company does.”

“Why did you buy this company?”

“Are your competitors [list of companies we know]?”

“What are your customers’ other options?”

“Is there a demo we can use or a sandbox instance we can use?”

“You’re a software company, but much of the work you do for your top 13 clients is custom, right?”

“Can you share a reference client with us?”

“3 or 4 of your clients seem to represent 60% of your revenue.”

“Do your customers have annual agreements?”

“Where can I find your MRR per client?”

“Why are your customers paying you instead of building this themselves?

“How do you charge for the custom work you do for clients?”

“Walk me through your pricing.”

“Tell me about your variable costs.”

“How does your offshore team work, and what’s your arrangement with them?”

“What do you [the owner] spend your time on?”

“What does the organization look like?”

“I see sales in February and April. Who closed those? The founder?”

“How did your year-over-year revenue grow so much?”

“Would it be fair to say that they essentially doubled the core biz from a year ago and then they added two big whales?”

“How much of the business is like them doing spammy shit that's not, strictly speaking, legal?”

“It sounds like you guys are moving quickly on this. What does the timeline look like?”

“Are you interested at all in any tail or continuing as an equity holder?”

What questions did I forget to ask?  Let's learn together!

jesse