How to Shorten Your Search to Buy a Business | Sam Rosati Interview
Open on YouTube ↗Sam Rosati is a serial acquirer and ETA community fixture who runs Pursuant Holdings, a holding company with interests in nearly two dozen small businesses. Rather than discussing a single deal in depth, this episode focuses on the framework Sam has developed from pattern recognition across hundreds of searcher journeys: the 'big three and second two' criteria (geography, size, industry, financing plan, and operator fit) that self-funded searchers must define clearly before starting their search. Sam argues that vague or over-constrained criteria is the primary reason search drags on for years, and he walks through how to balance the three primary axes — being tight on two and loose on one — to generate adequate deal flow. He also covers the risks of buying small (capital constraints, no cushion), the importance of understanding SBA underwriting rules before finding a deal, and the often-overlooked question of whether the searcher can actually replace what the exiting owner was doing day to day. The episode is advisory in nature and draws on Sam's own experience buying a dumpster business, a commercial fencing company, and many other acquisitions through his holding company.
Deal facts
- notes
- Sam mentions personal acquisitions (a dumpster business, a commercial fencing business, and interests in nearly two dozen small companies through his holding company Pursuant Holdings) but no specific deal figures are disclosed in this episode. This episode is primarily an advisory/framework discussion, not a deep dive into a single deal.
Why this business
Sam is an experienced serial acquirer and ETA community leader who runs a holding company (Pursuant Holdings) with interests in nearly two dozen small companies across different industries. He engages in acquisitions both for his own portfolio and supports self-funded searchers through his boot camp and investor network, viewing the community as a source of deal flow and operating talent.
What's working
- Running a holding company with interests in nearly two dozen small businesses across different industries and ownership structures
- Geographic focus (90 miles from Tampa) combined with broad industry and size criteria enabled deal flow and eventual success
- Commercial fence installation thesis: going out specifically for commercial fence installation contractors with a partner proved successful
- Using an informal advisory board with credible names on a website to build credibility with brokers and sellers during early searches
- Building a free investor database for self-funded searchers to access equity capital
- Running boot camps to teach searchers how to build a deal team, understand SBA underwriting, and connect with the ETA community
What's hard
- Being a lawyer and CPA when buying a dumpster business — managing blue collar staff successfully was, in Sam's words, 'arrogant at best and stupid at worst'
- Buying small businesses is riskier than it appears: one crisis (a broken truck, a lost employee) can destabilize a sub-500k SDE business with tight debt service coverage
- Searchers tend to believe the information in a broker's CIM at face value without asking hard questions about owner dependency and seller involvement
- Most searchers figure out their criteria as they see deal flow, which wastes months; going in without a clear 'big three and second two' is the number one reason search takes too long
- Industry-specific searchers (e.g., insurance agencies) face intense private equity competition bidding up multiples, making deals unaffordable
Notable quotes
The reason search takes so long is because people go out and search and they don't really know what is a good fit for them in terms of size, geography, and industry, and they're figuring it out as they go.
You are a pipeline manager.
When you buy a small company, you're likely going to do two things — hopefully buy it for a lower multiple and hopefully you're going to buy it sooner. But you're making a huge bet on you, the new operator, growing that business fast enough to outrace the lack of capital and profit to reinvest.
The thought and the belief that I could manage blue collar staff successfully was maybe arrogant at best and stupid at worst.
Everything in this community of buying small companies is harder than it looks on Twitter. It's more complicated than you can read about in the HBR guide or Buy Then Build. This is a hard entrepreneurial venture and a lot of these devils are in the details.