Deal Search checklist (Part 1)

Microacquire is a very popular aggregator. I’m on here regularly

It’s a lazy, rainy Sunday afternoon and I’m sitting in front of the computer, hunting for deals. Randomly I thought that I would actually document how I filter, search and reject deals via a public checklist. I don’t think that I will get it all right the first try, so may need to revisit this post at some point. I’m also trying to make writing a more frequent habit, so I’ll experiment with these shorter posts interspersed with the longform stuff - when I feel like I have something actually unique to say.

So - starting with a list of deals from your favorite aggregator, or email from a broker. I tend to look at the following in the first pass:

Match to investment thesis - I’m currently looking for vertical market software offerings to English speaking B2B customers that can be easily managed remotely. There is another level of granularity here around exactly which verticals I’m avoiding, but I won’t disclose that here.

Financials - Here I’m just starting to look at topline numbers to see if they are interesting i.e. growth rate of revenue, recurring revenue, TTM net profit, EBITDA

Customers / Industry - Ideally, I’m looking for an existing business that has non-technical business customers where the solution being offered helps the customer to make money or save time (e.g. CRM for artisan woodworkers). I’m actually less concerned about industry dynamics (growth rate, customer penetration) at this stage because I’ll save that for the deeper dive later.

Geography - Ideally, I’m looking for a business that sells only to western English speaking markets (US, Canada, UK, Australia, New Zealand) and has a remote customer service team. Selling only to developed markets reduces barriers to internationalization and the business can be remotely managed with only occasional travel.

Product / Service - Here I’m trying to make sure that the technology is complex enough so that there is something special about it i.e. a unique feature set relative to the competition. How niche of an offering is it…can it be made even more specialized? Or can a different service level appeal to a different (higher-paying) cohort?

And…..that’s it for now. The five items above usually help me to quickly exclude 95% of the stuff that comes my way. At some point in the future (tomorrow?) I’ll tackle my second round of reviews and what I typically cover.