Started as SBA Searcher, Built to a PE Fund

The first business that today's guest bought did under $300,000 of SDE, which is small for a single acquisition entrepreneur, let alone two. But Joe Wechsler bought the home care agency with a partner, making those earnings slimmer still. The business was also a falling knife, as Joe put it.

So small and troubled. Not a great combination, but Joe and his partner were able to save it. Now, despite buying very small, Joe was not intending to buy himself a job.

From day one. His vision was to acquire a portfolio of businesses, and the playbook would be to avoid buying a job and to give himself the capacity to buy yet more businesses. Which is not a new concept. In fact, it's probably exactly what many of you aspire to do.

But it's so much easier said than done. So I pressed Joe throughout our conversation on how he did it. Now, to be clear, he did have some advantages.

His balance sheet for one thing. Joe had enough liquidity that he didn't need to extract earnings from his acquisitions in the short term, it could reinvest them instead. Also, his consulting experience.

So often acquisition entrepreneurs are worried if they don't come from a finance background. Well, after this conversation, you may wonder if it's actually the consulting background that is most valuable of all. Joe bought three businesses in his first year ish as an acquisition entrepreneur in the 2020-2021 timeframe.

Eventually his model evolved and today he and four partners run a fund that looks more like traditional private equity. We hear about that evolution and why Joe landed on the model. He did listen for how he and his partners structured their fund, which is not the conventional 2 in 20 model.

Their structure is designed to enable longer hold periods of their acquired businesses and earlier cash distributions to their investors. By the way, that first acquisition, the falling knife home care agency, it has doubled to $2 million of revenue. Joe's involvement is very low at this point and with margins north of 25%, it has become a great business to own.

Here is Joe Wechsler, SBA acquisition entrepreneur, now general partner at Blueline Ventures. This Thursday, Franzi CEO Alex Smarchniak will will host a webinar on the intersection of ETA and franchising. Alex will discuss the pros and cons of buying an independent business versus franchise resales as well as franchise resales versus de novo franchising.

We don't want to be dogmatic here on acquiring minds. There are also great opportunities in starting franchise businesses. Of course. Alex will bring two franchise resale listings to do deal teardowns, unpacking how to evaluate the strengths and weaknesses of these opportunities, from category to franchise system to price to deal terms.

He'll also share a number of case studies on empire builders, that is Entrepreneurs who have built very large holdings through the acquisition of existing franchise businesses. The webinar is franchising for the ETA Buyer resales, roll ups and real deals and it is this Thursday, June 4th at noon Eastern. Link to register is right at the top of this episode's show Notes or on the Acquiring Minds…

Acquiringminds Co. Some good news out of the SBA last week. You may have heard recently that anyone who so much as invested in an SBA deal that went into default was denied access to any future SBA financing. Meaning, for example, if you wrote a $5,000 check into your buddy's H Vac acquisition 10 years ago and he defaulted, you would never be able to access SBA financing again.