Buy Then Build advocates acquiring existing profitable businesses rather than starting from scratch—popularized by Walker Deibel’s 2018 book and the explosion of micro-acquisitions, search funds, and indie acquisitions.
Core Thesis
Starting businesses = 10% success rate, years to profitability, high risk. Buying established businesses = existing revenue, proven model, customer base, immediate cash flow. Deibel argued entrepreneurs should skip startup phase, buy $1M-$10M revenue businesses, grow them.
Acquisition Models
Search Funds: Raise $300K-$500K, search 1-2 years for $5M-$20M business, acquire with investors, run as CEO. Stanford MBA pipeline—earned $200K-$500K+ salaries.
Self-Funded Search: Bootstrap search process, use SBA loans (Small Business Administration) for acquisition. No investor dilution.
Micro-Acquisitions: Buy $10K-$500K SaaS products on MicroAcquire, Acquire.com, Flippa. Indie hackers’ fast-track to revenue.
Holdco/Roll-Up: Buy multiple small businesses in same industry, consolidate, scale. Andrew Wilkinson’s Tiny model ($500M+ portfolio).
Why It Worked
Immediate Cash Flow: Day 1 revenue vs 6-24 months to first dollar starting from zero.
Validated Business Model: Someone proved it worked. Reduced execution risk.
Existing Team/Customers: Infrastructure in place vs building from scratch.
Cheaper Than Building: Time-to-revenue math favored acquisition—2 years salary + opportunity cost often exceeded acquisition price.
Platforms Enabling Micro-Acquisitions
MicroAcquire (2020): Free marketplace, $200M+ deals, 5K+ startups listed. Acquired for $60M+ valuation (2024).
Acquire.com (Formerly FE International): Brokered deals, vetted listings, $10K-$10M+ range.
Flippa: Marketplace for websites, apps, domains—$500-$500K typical. Quality varied wildly.
Empire Flippers: Premium curated listings, $50K-$10M+, thorough vetting.
SBA Loan Strategy
SBA 7(a) loans enabled buying businesses with 10% down, 90% financed (up to $5M). Borrowers used seller’s cash flow to repay loans—effectively buying businesses with little personal capital. 2019-2023 saw surge in SBA-financed acquisitions of Main Street businesses (laundromats, car washes, HVAC companies, accounting firms).
Risks & Challenges
Valuation: Overpaying killed returns. 3-4x revenue typical for SaaS, 2-3x EBITDA for traditional businesses.
Integration: Many buyers lacked operational skills—acquired profitable businesses, ran them into ground.
Founder Dependence: Small businesses often relied on founder relationships—customers left post-acquisition.
Hidden Problems: Due diligence missed technical debt, customer concentration, legal issues.
2023 Market
Interest rate rises cooled market. SBA loan rates hit 10-11% (vs 5-7% in 2020), making math harder. Valuations compressed 30-40%. Still, acquirepreneurship remained popular path—lower risk than startups, faster than climbing corporate ladder.
Source: Buy Then Build Book