Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game

by Walker Deibel

in all, buying a business is way more affordable than you think. In terms of initial capital required by the entrepreneur, it looks amazingly comparable to either starting a company or buying a house. Let me explain. Babson College statisticians reported through the Wall Street Journal that the average startup in the US kicks off with $65,000 in invested capital. Similarly, the average down payment on a home for the last three years5 was approximately $57,000, with the twenty-five counties experiencing the biggest increase in millennials6 averaging $66,174. So, whether people are starting a business from scratch or buying a house, they are investing somewhere around $65,000. Because companies under about $10 million in revenue tend to sell for lower multiples than middle-market or publicly traded companies, a $65,000 investment, paired with a 90 percent loan backed by the small business administration, could buy a company generating over $1 million in revenue, immediately launching an acquisition entrepreneur into the role of CEO of one of the largest 4 percent of companies in the US.