A couple of years ago now, I almost bought a small business as an escape plan out of my day to day. I still think about it fairly often and there is a robust twitter community around the idea of small business acquisition. I have no idea if I’d be any good at it but the idea of not being marked against an index and being my own boss appealed (still does, actually).
Mostly it appeals because almost all businesses below a certain valuation threshold change hands for 4 x EBIT, and usually less. Which is cheap. But of course then you have to run it, you are dealing with weird problems you might not have any real interest in, and its more than full-time (small businesses do not clock off in my experience).
I almost ended up funding a searcher - essentially providing capital to someone who was looking for this type of business to run (they pulled out at the last minute). The returns would have been slightly less - I’m guessing mid-teens, and required nothing from me other than capital. But the big leap of faith was giving cash to someone with no track record and no demonstrable history of being able to do the thing that they said they would do.
It probably stands to reason that there would be people who consistently make acquisitions from sellers (sometimes motivated, sometimes not) that manage to consistently deliver attractive returns. And it turns out that there are a few, in various different industries, all over the world (although concentrated in nordic countries, for some reason).
Would I like to hire these people to invest my cash in new businesses that deliver attractive returns? Turns out that I would like that very much.