Mergers & Acquisitions with AJ Caro - The Entrepreneurland Podcast, Episode 4

Pitchology

Steve Distante sat down with friend and fellow wolf, AJ Caro, a lifelong serial entrepreneur who truly embodies the benefits of M&A. His strategic acquisitions of a home health aide business and an insurance company served as the inspiration for the Littlepigs story above.

Highlights from this Episode:

Diversification is important. Diversification across different industries should bring longer-term stability, as one economic event would not be destabilizing enough to tank any of your businesses. Diversification allows for a variety of activities. Entrepreneurs tend to get bored easily, so having a lot of different activities can offer longevity in more ways than just buffering for a market downturn.

Diversification has its cons too. Diversification can take your concentrated growth efforts into multiple industries—which does create multiple streams of income—but not one larger company, which will likely hold a higher value.

M&A can be a win-win. Looking for companies in their sunset stage can help ensure a win-win. One of the greatest benefits of acquiring a “sunsetting” business is to acquire and mentor the “A player” from the company to manage and ultimately grow that new venture with minimal participation.

Acquire strategically. The best time to acquire a disaster relief company is before a tornado, hurricane, or earthquake hits, not after. Acquiring a business like this for a reasonable price can pay off immensely in the event of a disaster, or whatever it takes to change the normal market. You can make headway in diversification through M&A, and then develop those businesses under stable circumstances.

Savings are the first expense. In the world of cycles, never gouge your business. Make saving your first expense. In a downturn market, that is the time to access your savings for an acquisition.

It is often advantageous to invest (or acquire) during a big market downturn or cataclysmic event. This is why saving for rainy days is always a good strategy whenever possible. Another strategy involves relationships. When you identify businesses that may be good M&A opportunities for you in a few years, keep an open line of communication with the current owners. If something happens and they decide to sell the business, they’ll come to you as a lifeline.

Connect with Steve and AJ:

Steve Distante - https://stevedistante.com

AJ Caro - https://www.linkedin.com/in/ajcaro/