Chelsea Wood·May 23, 2022

7 Common Mistakes Across 250 Searchers

This episode is an expert/advisor interview with Chelsea Wood, Managing Director of the Acquisition Lab — a cohort-based program founded by Walker Deibel (author of Buy Then Build) that coaches first-time acquisition entrepreneurs through the process of buying a small business. Chelsea draws on her background in healthcare corporate development and industrial-organizational psychology to coach members. With over 250 members and roughly 40 closings at the time of recording, she identifies seven recurring mistakes that prevent searchers from closing: (1) trying to be an expert in everything rather than building a strong team, especially for financial due diligence; (2) analysis paralysis and the incessant need for external information as a substitute for internal clarity; (3) imposter syndrome — nearly all first-time buyers doubt whether their background qualifies them; (4) failure to develop a clear value proposition as a buyer, which makes it impossible to evaluate how they fit into a given business; (5) overly rigid search criteria that eliminate viable opportunities; (6) desperation-driven target drift after several months of unsuccessful searching; and (7) insufficient daily deal-flow activity. Chelsea also discusses the additional bias women and minority searchers face in the market, and describes how the lab's buyer branding tools help members stand out with brokers and sellers.

Deal facts

notes: This is an advisor/expert episode. No specific acquisition deal is discussed. Chelsea Wood is Managing Director of the Acquisition Lab (founded by Walker Deibel), a cohort-based program for acquisition entrepreneurs. The lab had ~250+ members and ~40 closings at time of recording.

Why this business

Chelsea joined Walker Deibel's Acquisition Lab after a career in corporate development (healthcare M&A) and industrial-organizational psychology consulting. Walker recruited her to run the lab because searchers were seeking hands-on help buying businesses and he lacked bandwidth. Her background in large institutional transactions and IO psychology made her well-suited to coach first-time buyers through the acquisition process.

What's working

Structured four-week onboarding program focused on getting searchers ready to go to market, with cohort-based live sessions and on-demand course content
Value proposition buyer profile — a functional resume format that positions each buyer's unique skills, helping them stand out with brokers and sellers
Community of like-minded searchers reduces imposter syndrome by showing members that others with similar backgrounds have closed deals
Members are getting chosen over private equity offers and receiving pocket listings from brokers due to their strong branding and perceived certainty to close
Approximately 40 closings from ~200-250 members (~20% close rate), which Chelsea notes is high performance relative to the broader search world
Bringing in guest experts (due diligence specialists, psychologists for change management) to address specific knowledge and emotional challenges

What's hard

First-time buyers want to be experts in everything, including financial due diligence, rather than building the right team of advisors
Analysis paralysis: searchers seek more and more information externally as a safety mechanism instead of developing internal clarity about whether they are the right buyer
Imposter syndrome is nearly universal — most members do not feel their background qualifies them to buy a business
Overly rigid search criteria — members anchor too tightly on SDE targets or industry type (e.g., only SaaS) and miss viable adjacent opportunities
Desperation at the three-month mark causes some searchers to abandon their target statement and pursue completely mismatched businesses
Insufficient daily deal-flow activity — members who struggle to close deals typically have not signed up with enough brokers, reviewed enough listings, or put in enough LOIs
Women and minority searchers face additional bias from sellers and brokers, and the lab had no female closers yet at time of recording (one was pending)
Sellers occasionally kill deals the week of closing — three seller pull-outs occurred in a single week at one point

Notable quotes

The greatest risk is actually in yourself and you're looking externally for all this information when in essence it's whether or not you are the right person to build this business and make it grow.

A broker reached out and said, you know, are they looking to buy a business or they'd be looking for reasons not to buy a business.

No matter you could spend a million dollars in due diligence on a million dollar deal and not be confident enough — not be 100% sure you should buy a business. It's always going to require a leap of faith in yourself that no matter what didn't get uncovered, you'll figure it out.

The biggest mistake you could possibly make in my opinion is changing your target out of desperation. You can change it out of clarity.