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Finding Lucrative Opportunities When Acquiring a Business with Ayo Phillips

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June 10, 2021

In this episode, we speak to Ayo Phillips about his journey acquiring a company with a sponsor. We discuss how to expand the business you acquire, the best way to search for a business to buy, and what you should carefully consider before you acquire a business. 

Tune in to learn how to find the most lucrative opportunities when buying a small company. 

About our Guest: 

Ayo Phillips is the CEO of Perfect Surface and host of the podcast Rookie CEO. He acquired Perfect Surface in 2017 after reaching out to 15,000 different companies. Perfect Surface is a company that provides maintenance services to property managers and owners. His goal is to turn it into a technology-enabled operation.

On today’s episode: 

  • How buying a company can be less risky than starting your own  -01:55
  • His experience working at a great place, but feeling like he was a bad fit- 04:34 
  • The different pathways of acquisition entrepreneurship- 07:24
  • How he acquired his business in a space he had no experience -10:04
  • How a second child can become a catalyst for many entrepreneurs – 12:06
  • Should you do due diligence yourself when you buy a company (and a story about a strip club)- 14:40 
  • When buying a business think about if you will be able to afford to maintain customer relationships – 17:20
  • Why you should build your business in public (and how it can help you overcome loneliness)- 19:29
  • The goal for his company: bringing technology into an analog game- 22:47 
  • The relationship he has with his business sponsor family- 25:20 
  • If you are looking to buy a company, narrow your search using this method- 27:45 
  • Is Ayo Phillips going to transform his company into a tech company? – 31:11
  • Legacy: 2 things that are important to him (it’s ok to be bad at things) – 32:53
  • Lessons learned #1: Acquisition entrepreneurship is a risk-mitigating choice- 38:07
  • Lesson learned #2: Building in public (keeping things in perspective) – 38:27
  • Lesson #3: Near stream niching down -39:04

 

Key Takeaways: 

  • The difference between acquisition entrepreneurship and startup entrepreneurship is that you are buying something that already exists, so you should be reducing your risk profile. In fact, only 1 in 10 venture-backed companies succeed. 
  • The work you do at a job can be both intellectually stimulating yet unfulfilling at the same time.
  • Pathways of acquisition entrepreneurship: traditional self-fund pathway; sponsored search (partnering with someone/a family). 
  • It is easy to look at a business from a customer concentration perspective, it is more important to look at a small business from a relationship concentration perspective. This means that even if a certain customer is only 2% of your revenue, you want to understand how relationships are maintained in the long term and it should be sustainable. 
  • You have to hang out where your clients hang out, so when you buy a business make sure that you can afford to do that before buying that particular business. 
  • There is a large opportunity in bringing technology to old-school businesses. 
  • A good way to find lucrative companies to buy is to look for industries that are off the beaten path that has not yet been optimized by technology and find a way to glean efficiencies and capitalize on that gap. 

 

The best way to find a business to buy is this:

“So if I were to say, for anyone who is listening to this, who is thinking man, what areas can we go into and how can we add value – I would find businesses that are off the beaten path, industries that are off the beaten path, who haven’t yet gone on this technology optimization path and find a way inject some of that into those business’ processes and glean efficiencies from those things” – Ayo Phillips (29:35)

What is your advice for people who want to acquire a business? Tell us in the comments and don’t forget to say hello if you would like to share your entrepreneurship story on our podcast. 

Connect with Ayo Phillips:

 

Also mentioned this episode: 

Search Funder (a great community for people thinking of acquisition entrepreneurship): Website

 

Connect with A.J.Lawrence:

 

Follow Beyond 8 Figures:

 


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