Refining my investment criteria

09/26/2022 04:25 PM By Tom

It's been a few months since I sold my company and as much as I have enjoyed the downtime, I can feel getting antsy for a new challenge. I've spoken with a few friends and business associates about my next act and I noticed something about myself. It seems that I am most interested in the 'building' part of starting a new business. I get excited about the possibilities, designing the systems & business processes...I guess 25+ years of SAP software consulting have left their mark on me.

I had an inspiring chat with my old SAP consulting colleague Amber Christian recently. Amber is a very experienced SAP consultant and, she has successfully pivoted into the world of micro private equity - in fact, she has already acquired 2 companies this year!

I like the idea of buying a business for myself next (although I also enjoy starting something from scratch myself)...which made me think about what type of business I'd be interested in. What size? What industry? Revenue/profits? Age? Lot's of questions, few answers.

So here are some thoughts that will help me focus my attention:

Business Age

I have no problem starting a new business from scratch - actually, this may be my preferred way to get into something next. That said, however, I will very much consider buying a business as long as it has been around for 2+ years. In my head this proves the original business idea/concept, assuming that the items below are met, too.

Industry / Topic

All my professional life was spent in the technology / software industry. This is where I feel most comfortable and what I understand easily. Software comes easily to me and I consider myself a decent software architect. Also, I like recurring revenue a lot - who doesn't, right? Thus, I will focus my attention on SaaS-based business in the technology, software and EdTech (educational technology) space.


I had to think a bit about this one...specifically, what size am I referring to? Revenue size? Number of customers? Staff size? Given my other investment parameters, I'll stay clear of companies with a large staff (or that would require a large staff upon scaling the business). In fact, anything with a large overhead, fixed expenses and overly complicated infrastructure requirements is a no-no for me. I like things that are small, fast and nimble.

Revenue & Profits

I don't really care about the revenue & profits as long as there are some. The company will have to have consistent and growing revenues and should be profitable to peak my interest. If the company was unable to generate meaningful revenue after at least 2 years of operations it's a pass for me.

These are some but not all of my criteria for the next business. I'll think more about the details and will refine my approach as I go along...but for now, this will get me started.

Next big question is: Where do I find businesses like this?

Ah, good question indeed and food for thought for my next blog post.

Until then, thank you for your comments and suggestions below.