An Untapped Funding Source for Acquisition Entrepreneurs

Welcome to the inaugural issue of Acquiring & Exiting, your premier resource for navigating the complex world of business acquisition and exit strategies.

While most entrepreneurs struggle with startups that have a 90% failure rate, acquisition entrepreneurs enjoy immediate cash flow, established customers, and proven business models from day one. This newsletter is dedicated to giving you the unfair advantage that comes from buying existing businesses rather than starting from scratch.

In each issue, we'll deliver battle-tested methods for finding, funding, growing, and selling businesses in today's competitive market. Whether you're a first-time buyer with limited capital, a business owner looking to grow through acquisition, an investor seeking quality deals, or an M&A professional staying ahead of industry trends – this newsletter is designed specifically for you.

Let's dive into this month's insights.

FEATURE: THE SBA ADVANTAGE

An Untapped Resource for Acquisition Entrepreneurs

The Small Business Administration (SBA) loan program represents one of the most powerful yet underutilized tools for acquisition entrepreneurs in the United States. With 70,000+ authorizations for over $31 billion in approvals during the 2024 fiscal year, SBA loans have become the backbone of small business acquisition financing.

Despite this impressive reach, only about 25% of banks in the US have made at least one SBA loan in the past year. This creates both a challenge and an opportunity for savvy acquisition entrepreneurs who understand how to navigate this specialized lending landscape.

"The SBA isn't lending money directly," explains Ray Drew, a six-time top-producing SBA business development officer and host of the Art of SBA Lending podcast. "They're going to institutions and saying, 'We want to get access to capital out there to create and retain as many jobs as possible. We're willing to absorb 75% of the losses if a deal goes bad.'"

This government guarantee fundamentally changes the risk calculation for lenders, allowing them to approve deals they would otherwise reject and offer terms that conventional financing simply cannot match.

Why SBA Loans Should Be Your First Consideration

When exploring financing options for your business acquisition, SBA loans offer several compelling advantages:

1. Extended Amortization Periods
While conventional business acquisition loans typically offer 5-7 year terms, SBA loans extend to 10 years, with some exceptions going up to 25 years. This longer amortization period significantly reduces monthly payments, improving cash flow during the critical early years of ownership.

2. No Prepayment Penalties
Unlike many conventional loans that lock you in with hefty prepayment penalties, SBA 7a loans — with terms less than 15 years — allow you to pay off your debt early without financial punishment. This flexibility can be invaluable if your business performs better than expected or if you're planning an early exit.

3. Lower Equity Requirements
The SBA requires a minimum 10% down payment for business acquisitions, though some lenders may require more. This is often substantially lower than conventional financing requirements, allowing you to preserve capital for operations or additional investments.

4. Access to Deals Conventional Lenders Reject
The government guarantee enables lenders to approve deals with characteristics that would typically be rejected by conventional financing, such as businesses with limited operating history or those in industries perceived as higher risk.

5. Comprehensive Financing Packages
SBA lenders can often include working capital and even lines of credit in the initial financing package. "Sometimes the business needs a line of credit, and when you're buying a business, your only chance of getting one in the first year or two is that SBA lender packing it on," Drew notes.

CASE STUDY: CREATIVE FINANCING IN ACTION

How Ross Tomkins Acquired 18 Businesses with Limited Capital

While SBA loans provide a powerful financing tool for US-based acquisitions, entrepreneurs worldwide are employing diverse strategies to build wealth through business acquisition. Ross Tomkins, a physiotherapist by background who has completed 18 acquisitions and 4 exits over the past few years, shares his journey and the lessons learned along the way.

"I'm a firm believer that in every situation you either win or you learn," Tomkins explains, "and we have had a number of things happen that you probably would never come across in due diligence. And each of them have been a really good learning tool."

The 100% Seller-Financed Acquisition

Tomkins' first acquisition came after his occupational health company lost its biggest client, Amazon, which represented 70% of their business. This crisis became "probably the most positive thing that's ever happened in my life," as it led him to discover acquisition entrepreneurship.

His first deal involved acquiring two small physiotherapy clinics with a combined revenue of around £300,000 ($375,000). The most remarkable aspect was the funding structure: 100% seller financing.

"I stumbled across the idea of 100% seller financing," Tomkins recalls. "We've never found another deal since then that worked in this way, but it demonstrated to me that there are all sorts of different ways to fund deals."

The key to making this work was building strong rapport with the sellers, who were in declining health. By structuring payments over 3 years from the business profits, Tomkins created stability for the sellers while requiring no upfront capital from himself.

Equity Partnerships for Faster Growth

For a more recent acquisition, GT Vision (a leader in medical optics), Tomkins faced a funding challenge when traditional acquisition finance dried up. With a purchase price of £1.2 million ($1.5 million) and a tight closing timeline, he needed an alternative approach.

"What happened with GT Vision is we reached a point where our funding had disappeared and we had a very short space of time to close the deal," he explains. His solution was to reach out to his network and bring in nine external investors who contributed varying amounts in exchange for equity stakes.

This approach allowed Tomkins to make the required day-one payment of approximately £600,000 ($750,000) without taking on debt, with the remainder structured as deferred payments over four years, including a balloon payment at the end.

INVESTOR TAKEAWAY: Clear Exit Vision

Less than 2 weeks after acquiring GT Vision, Tomkins was already in discussions with a private equity firm in Los Angeles about a potential future exit.

"They typically buy businesses that are doing around about 8 or 9 million in revenue," he notes. "So we need to grow this by a factor of 4 to get to that size." This clear exit vision provides a specific growth target and timeline for the business.

For investors, this highlights the importance of having a defined exit strategy from day one, including specific growth targets and potential acquirers already identified.

BUSINESS OWNER SPOTLIGHT: BUILDING FOUNDER-INDEPENDENT ENTERPRISES

Strategic Exits Don't Happen By Accident

Allison Maslan, CEO of Pinnacle Global Network and author of "Scale or Fail," emphasizes that "strategic exits don't happen by accident — they're engineered through intentional system design & scalable operations."

If your company still depends on your daily involvement, you're not just limiting your growth, you're significantly reducing your acquisition value. Here are three key steps to transform your founder-dependent business into an attractive acquisition target:

1. Document Core Processes

Begin by documenting every critical process in your business. Create standard operating procedures (SOPs) for everything from sales and marketing to operations and customer service. This documentation makes your business systems transferable and reduces reliance on any single person—especially you.

2. Build a Leadership Team

Develop a leadership team that can run the business without your daily involvement. This might include a COO, sales director, and operations manager who collectively possess the skills to maintain and grow the business. Investors and acquirers value businesses with strong management teams that will remain post-acquisition.

3. Create Recurring Revenue Streams

Businesses with predictable, recurring revenue are significantly more valuable than those relying on one-time sales. Consider subscription models, service contracts, or maintenance agreements that generate consistent monthly income. This predictability makes your business more attractive to potential buyers and can increase your valuation multiple.

The Value Multiplier Effect

By implementing these strategies, business owners can typically increase their valuation by 3-5X while simultaneously reducing their personal workload by 70%. This creates the ultimate win-win: a more valuable business that requires less of your time.

M&A TRENDS: WHAT'S WORKING NOW

Deal Sourcing in a Competitive Market

For M&A professionals, staying ahead of the competition in deal sourcing is critical. Here are two approaches that are proving particularly effective in 2025:

LinkedIn Sales Navigator: The Hidden Gem

Ross Tomkins describes LinkedIn Sales Navigator as "an incredible tool" for targeted acquisition searches. While you can't search directly by revenue, you can use proxies like employee count and owner experience to identify promising targets.

"If you look for a managing director, a founder, or an owner with 10 to 50 members of staff who has more than 10 years experience, you're likely to find a business doing a few million in revenue," he explains. His approach involves activating Sales Navigator for just one week every couple of months, generating approximately 50 leads that his team then pursues over the following weeks.

The Zero Moment of Truth: Building Trust with Sellers

Perhaps the most valuable insight for M&A professionals is the concept of the "zero moment of truth"—the point at which a seller trusts you enough to do business with you. Based on research by Google, this typically requires "11 touch points with someone across... five different mediums."

These touchpoints might include LinkedIn interactions, phone calls, emails, face-to-face meetings, or social media engagement. The key is that all these interactions must support a consistent narrative: "I'm a capable, safe pair of hands that can take your business from you, grow it, look after your staff, look after the legacy, and give you the money that you fairly have worked for over these years."

This emphasis on professional positioning extends to every aspect of your online presence and communication strategy.

RESOURCES & OPPORTUNITIES

Upcoming Events

Business Acquisition Summit - Virtual Replay Access recordings from the 2025 Business Acquisition Summit featuring 15+ expert speakers sharing their strategies for finding, funding, and growing acquired businesses. [Link: acquisitionaficionado.com/business-acquisition-summit-2025]

Recommended Reading

"Buy Then Build" by Walker Deibel The definitive guide to acquisition entrepreneurship that has helped thousands of entrepreneurs buy existing businesses instead of starting from scratch.

"The Private Equity Playbook" by Adam Coffey Learn how PE firms create massive value through acquisition and operational improvements from an author who built 3 national service companies for 9 private equity sponsors.

Deal Opportunities

SBA Pre-Approved Business Listings Our partners at Truliant SBA Lending have provided a curated list of businesses that have already been pre-qualified for SBA financing, reducing closing time by 2-4 weeks. [Contact: [email protected]]

THE ACQUISITION ENTREPRENEUR'S MINDSET

The true advantage of acquisition entrepreneurship isn't just financial, it's psychological. While startup founders face years of uncertainty and negative cash flow, acquisition entrepreneurs start from a position of strength with existing customers, revenue, and systems.

This advantage creates a powerful mindset shift: instead of desperately trying to make something work, you're methodically improving what already works. This confidence and clarity lead to better decision-making and ultimately greater success.

As you consider your next move in business, remember that acquisition entrepreneurship isn't just an alternative path, it's often the smarter path with higher odds of success and faster routes to financial freedom.