What is at the back of the explosion in acquisition entrepreneurship?

Welcome to the entrepreneurial equivalent of glamping.

I’m flying solo on the podcast this week as my co-host Rob Kenedi is off sipping Mai Tais in the sun.

Actually, he’s just very busy working on his new startup. You see, Rob, like me, is old school when it comes to entrepreneurship: we hear the call, jump off the cliff, and try to build a business on the way down.

“It’s like you’re getting married and writing your prenup and your divorce agreement on the day you get married.”

But that’s so 20th Century. It’s so much easier these days to become an entrepreneur through acquisition.

You might be familiar with BetaKit’s coverage of companies like Emerge Commerce, Agora, or even something like Tiny Capital. They buy tech or ecommerce businesses, roll them up, or leverage operational efficiencies on the backend to make the whole greater than the some of its parts.

That’s not really what we’re talking about today.

We’re not talking about entrepreneurs buying out other entrepreneurs to create some entrepreneurial Voltron. We’re talking about buying into entrepreneurship. And apparently business is booming.

That’s according to Elizabeth MacRae, co-founder and head of partnerships at Village Wellth, who joins us on today’s podcast.

Village Wellth acts as a bit of a marketplace marketplace: aggregating business opportunities from brokers, marketplaces, and private sellers. The company also works to qualify buyers to help expedite the matchmaking process.

But let’s get back to the booming business part, which is being driven on both sides: supply and demand. MacRae notes that it’s estimated that 41 percent of all SMEs in the US are owned by baby boomers, and in Canada over 60 percent of small business owners are over the age of 50. That’s a lot of entrepreneurs looking for a payday.

The demand is being driven by a bunch of things, including YouTubers and a growing collection of high-net-worth individuals who believe that a business might be a better asset class to acquire than, say, house flipping.

How high-net-worth? Well, that’s the crazy thing: MacRae tells us on the podcast that perhaps the biggest driver has been the availability of lending capital. In the US, you need as little as 10 percent down to buy an existing business; in Canada, that number is 25 percent if you go with someone like BDC.

Now, color me biased as a small business owner and entrepreneur, but it’s a trip to hear that banks like BDC might be more comfortable with 25 percent down to acquire a business it wouldn’t offer a loan to in the first place. And don’t get me started on the US lending market. I mean, what could go wrong?

Let’s dig in.


The BetaKit Podcast is sponsored by RBC.
RBC is a fast-paced team of innovators, working to create positive change for their clients and communities. Join our team and begin building the future with us today.


Subscribe via: RSS, Apple Podcasts, Spotify, Stitcher, Google Podcasts.

This episode originally aired on November 8, 2021. The BetaKit Podcast is hosted by Douglas Soltys & Rob Kenedi. Edited by Kattie Laur. Sponsored by RBC.

Feature image courtesy PxHere

.

Leave a Comment

%d bloggers like this: