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Becoming the Wallet Guy
When asking the right questions leads to unlikely outcomes
In the midst of a deep rabbit hole one night during the pandemic I stumbled upon Walker Deibel's book, Buy Then Build, and it rocked my world. Up to that point I had assumed that buying a company was an endeavor reserved for the ultra-rich, venture capitalists, private equity firms, or other big companies themselves. The revelation that acquiring a business is not only accessible to many but also a fantastic vehicle for entering the world of entrepreneurship with less risk while providing immediate cash flow was mind-blowing.
After a long journey of researching the process, exploring various funding options and business models, and building up liquidity, I decided I was ready. A partner and I began fielding calls with sellers. Over the course of about eight months we were exposed to some really cool businesses, and we made offers on a couple: a vitamin company and a pet products business. The sellers of those businesses opted for other buyers who were either paying in cash, more experienced, or both. It turned out that this was an incredibly competitive space. Similar to the housing market, sellers had an embarrassment of riches in the form of eager buyers. They had the luxury of being very discerning and selective.
A bit deflated, I slowed down my acquisition efforts for a few months and focused on other things. It seemed like this whole acquisition entrepreneurship thing might be too good to be true.
But the idea of buying a business stuck around in the back of my mind, and I would often take a cursory glance at the business listings that came through my inbox. One morning I opened one of those listings and read about a business that sold quality leather phone wallets – the kind that adhere to the back of your phone and hold a few cards and some cash. Two guys had started the business in college after identifying a gap in the market, and sales quickly took off. After five years of explosive growth they were ready to cash out and move on.
The phone wallet business looked like an awesome opportunity, but I didn't get my hopes up. I knew there would be an absurd amount of demand for it, and the fact that I would be financing the purchase along with my relative inexperience made the chances of sellers accepting any of my offers pretty slim. I reached out to the broker anyway to schedule a call with him and the sellers just for the hell of it.
The sellers and I immediately hit it off. They were really smart, and the way that they had painstakingly designed the product, built out a reliable supply chain and developed a sizable base of loyal customers was impressive to say the least. This was an awesome business.
I started off by asking what was most important to them in a buyer. What did they want from the person or people who would be carrying forward their legacy? That may sound a bit dramatic, but these guys had spent countless hours over the past six years building this thing from nothing. It was their baby.
They told me that they were selling the business because they no longer had the time or motivation required to capitalize on the many opportunities to take the business to the next level. They wanted a buyer who had the bandwidth and drive to realize all of this latent potential. The business wasn’t complicated, they said — it just needed some nurturing and effort.
I told them that this might make me a pretty darn good fit, because while I didn’t have a ton of experience or a wealth of resources, this business would be my sole focus. I wouldn’t be buying it just to lump it into a large portfolio of other companies I owned or supplement an existing brand. It would get the time and attention that it deserved, and I would leverage the knowledge they had gained from six years of building along with my own skillset to ensure that the potential was realized.
It was a great conversation. I submitted as generous of an offer as I could afford less than an hour after the call ended. But in spite of how well that conversation went, I didn’t think my offer had any chance of being accepted. There would be too much demand from too many qualified buyers. After a few days I had pretty much forgotten about the whole thing.
Two weeks later I woke up relatively early on a Friday morning to look through the busy schedule I had for the day, and an email with the subject line “Congratulations & Next Steps” caught my eye. I scrambled to open it.
“Congratulations! It was a competitive situation with multiple offers, but I'm very pleased to let you know [the sellers] thought you were fantastic and a strong fit. As such, [the sellers] have decided to accept your offer.”
This just got real.
After eventually moving my jaw back to its normal position, I reread the email a few times then took my dog for a walk to try to wrap my head around what had just happened.
The rest is history. After five months of mostly sending documents back and forth between bankers and lawyers, the deal was signed and the business was mine. I’ve now been the proud owner of Wallaroo Wallets for almost four months.
In addition to teaching me more about the mechanics of SBA loans than I ever wanted to know, this experience reinforced two important ideas:
The power of asking good questions: As I mentioned, the odds were not in my favor here. The only reason I got this business (besides for a lot of luck) is because I asked questions to better understand who the sellers were and what was important to them. Luckily the things that were important to them were things that were in my wheelhouse. But if I hadn’t started by asking those questions, we would never have uncovered how good of a mutual fit this was and the idea of buying a business would still be an unattainable dream.
At the end of the day, just be a decent human: It was remarkable how many of the prospective buyers joined these calls with the sellers and unceremoniously grilled them on small details or treated the sellers like they had something to prove. Yes, it’s business. Yes, there are important things to verify throughout the process. But there’s a reason that prospectus documents are dozens of pages long and that every deal has a due diligence period. The main objective of the call between sellers and prospective buyers is to determine whether there’s a good mutual fit. If you treat people like crap or like they owe you something, it’s probably not going to be a good fit regardless of how qualified you are or how much money you can offer. At the end of the day, like anything else, everyone involved is a human being with fundamental needs and desires. Forgetting that is a great way to fail.
Whether you’re buying a business, interviewing for a job, or asking someone out, I’d argue that these ideas are universal and will go further than any technical tactic or piece of knowledge can. And that’s pretty cool.