Connor Pera·August 31, 2023

How to Buy a Business as a First-Timer | Connor Pera

Connor Pera, a Kellogg MBA who discovered ETA through business school and was further catalyzed by running a small vending machine side business, conducted a part-time search while working a corporate marketing job and closed on The Print Authority — a 32-year-old commercial printing business in Brentwood, Tennessee (Nashville area) — in May 2023. The business generates approximately $2 million in revenue with 10-15% EBITDA margins and employs 12 full-time and 3 part-time staff. Connor financed the deal with a conventional (non-SBA) bank loan at 70% LTV on a 5-year amortization, bringing 30% equity to the table. He was drawn to the business's web-to-print model serving franchise systems, its Lindy-effect durability, the long-tenured team, and his belief that he could add value through sales and digital marketing. Key mistakes included not accounting for working capital adjustments before sending the LOI, and delaying full-time entry into the business after close due to a prior commitment to his wife around childcare for their newborn — which created some team uncertainty about his commitment. At time of recording (about two months post-close), Connor was focused on building trust with the team and getting a sales and marketing engine running.

Deal facts

sde ebitda: EBITDA margins 10-15% on ~$2m revenue (implied ~$200k-$300k)
revenue: ~$2m (on track)
financing structure: Conventional bank loan (non-SBA), 5-year amortization, 70% LTV; 30% equity injection; personally guaranteed
notes: Regional bank acquisition financing; no SBA used; working capital adjustment created retrade issue at close; seller financing not mentioned

Why this business

Connor was drawn to the 32-year durability of the business through multiple recessions and the internet era (Lindy effect), its web-to-print model serving franchise systems with recurring-ish demand, the strong long-tenured team, and the opportunity to apply sales and digital marketing skills the business lacked. He was also bullish on Nashville as a growth market and saw the people-heavy nature of the business as a feature, not a bug.

What's working

Web-to-print model serving franchise systems and multi-location businesses as a recommended vendor — provides recurring, compounding revenue as franchises grow
Long-tenured employees with deep industry knowledge provide operational continuity through the ownership transition
Strong SEO and digital presence, rare for commercial printing, providing inbound lead flow
Seller relationship was smooth throughout the deal, enabling a trust-based transition
Nashville growth market thesis: regional over-indexing in a high-growth metro seen as structural tailwind

What's hard

Working capital adjustment was not accounted for early enough in the deal, requiring more equity at close than anticipated — a self-described mistake from firing off the LOI too quickly without modeling working capital
Delayed full-time entry into the business (due to commitment to wife to be home with newborn until childcare was arranged) created questions among the team about his level of commitment and strategy
Building trust with the team as a new owner is a long process; his brief absence at the start made that harder
Industry is competitive ('red ocean') and faces ongoing secular pressure from digital alternatives
Conventional loan's 5-year amortization creates higher monthly debt service than SBA would have

Notable quotes

Every business has issues you just got to decide what issues you're comfortable dealing with and you're excited and invigorated about versus the issues that you're like I don't want to spend any time on that.

The information you are looking for is not in the model it's not in the diligence of the business like it's ultimately like it's way down in the gut and like you got to like know whether or not it's there and if it is like in my opinion there's a huge benefit to action and like move and don't wait.

There's no way to externalize any of the consequences of your decisions when you own a small business like and if you are not comfortable living in a world where your decisions can be interpreted in seven different ways and all those interpretations are valid and they can be thrown in your face — then you're probably in the wrong seat.

I think there's like not enough discussion among the SMB acquisition community about what a cool and awesome opportunity it is to be able to impact people who often times you know in sort of the circles that Searchers run in versus the circles that you know people who work in small business run in like there there's you know often times not much overlap in other areas of life.