Welcome to Upper Market

Each week, I do my best to continue to wage war against sub-par business listings.

I do this with my 2013 MacBook Air (2015) - acquired in 2021 for $400 off Facebook Marketplace.

“A good workman never blames his tools”

What’s ahead in this Newsletter:

Thank you to everyone to attended the Live Workshop Yesterday.

There’s a tremendous amount of gratitude that I have for the group of you that gave up almost all of your Saturday to join me.

It was a very cathartic experience to share with you my “special interest” in business acquisition.

I’m NOT sorry about the dating references or using basketball analogies to help with any of my teaching points.

And I’m especially not sorry about helping give you all more confidence in the next step of your business acquisition journey.

We covered A LOT of stuff, but these things I could tell resonated with people:

There will be another in the coming months - plus some other fun stuff that I have planned

But that will remain to the side for now, as this man is gassed.

The chances of you closing a “No Money Down Deal” are slim.

The chances of you closing a GOOD “No Money Down Deal” are even more slim.

These don’t come around very often. They certainly don’t always come around at the beginning of your Deal-Making journey.

They’re more of a privilege than anything and normally fit very narrow circumstances where you’re actually able to trade value with the person who is giving you ownership (some, most or all) of their business.

Sure, you can optimise for no money down deals, but I’d rather equip you with actual tools, rather than forcing awkward conversations with owners…

“Hey, I love your business - I really want it. But I don’t actually want to pay anything for it”

If we can all practise empathy at the moment - how do you think an owner is going to respond to that?

Before I start hearing about “desperate Baby-Boomers” who have no other choice but to sell immediately, let me give you a reality check.

The buyers for good businesses are always there. This week’s deal was live for less than 3 days and it’s already had 20 enquiries on it.

Chances are low that all the offers are going to be no money down.

Here are my tips for bridging the capital you need to get into a deal:

This is just the start of a few tools you can use to structure a deal to get you ownership of the asset.

The way I describe deal structures in Speedrunning Capitalism is as a group of levers. If you pull them in the right way, you unlock the deal and you own the asset.

Each business has several unique combinations that you can pull. You just have to be happy with the outcome that it gives you (they all have different implications).

There’s no way I could teach you all I know about deal structures in an email;

So why don’t you join me (digitally) Wednesday 6th May (7pm NZT) for 90 minutes on Deal Structuring alone?

I’ll walk through how I approach structuring deals, financing and answer any questions that you might have on the topic.

If we get at least 5 RSVP’s I’ll run it - no guarantees I’ll record it.

You can register (for free) here

This is the type of business that gets taken off the market quickly.

Buyers understand exactly what they’re looking at. High-margin, recurring revenue, low overhead, and embedded into the operations of hundreds of customers is a combination that doesn’t sit around for long.

At ~$2.13M revenue and ~$1.15M EBPIT with ~85% recurring (~$1.82M annually), the numbers immediately tell you what this is.

It’s a cashflow engine that’s already running and throwing off meaningful earnings.

The reason these businesses are so attractive comes down to how they sit inside a customer’s operations. Once a business has its telephony, connectivity, and cloud systems set up, switching providers becomes disruptive, so most clients stay put unless something goes seriously wrong.

That creates a level of revenue durability that’s hard to replicate in other service businesses, because you’re not relying on constant re-selling. You’re effectively billing for something that just needs to keep working in the background.

The client base reinforces that position, with ~500 active clients and ~95% repeat business showing a broad and stable spread of revenue. There’s no obvious concentration risk (TBD), and more importantly, the relationships appear to be long-standing.

The model itself is what is doing a lot of work here. This isn’t dependent on a physical footprint or a specific geography, which gives flexibility and makes the business easier to operate and scale.

From just the listing, it is clear that there’s a high chance that this business just works.

The real question is how robust the underlying structure is and how much of that earnings is protected.

What I’d Want to Understand:

First is churn, because even strong recurring models can lose clients over time. Understanding how many customers are leaving and how that compares to new additions gives you a clearer picture of true revenue stability.

Second is contract structure, as there’s a big difference between clients who are contractually locked in versus those who simply pay monthly. If the majority of revenue is non-contracted, the stickiness relies more on service quality than legal protection.

Third is supplier relationships, since telephony businesses typically rely on upstream providers for infrastructure. If there’s dependency on a small number of suppliers or limited pricing control, that can impact margins over time.

Fourth is technical reliance within the business, particularly whether key knowledge sits with the current owner or team members. If systems are well documented and transferable, the risk is lower, but if not, that becomes a key transition issue.

Fifth is support intensity, because 500 clients can either be smooth and predictable or operationally demanding depending on the nature of the service. Understanding ticket volume and support requirements will tell you how scalable the model is - or how much of a pain in the ass the support requests are going to be.

Growth Angle

Growth here is less about reinventing the business and more about tightening what’s already working. Converting more customers onto longer-term contracts improves visibility, while expanding services into mobile, fibre, IT, and video increases revenue per client.

There’s also likely opportunity in repricing legacy accounts that haven’t kept up with the market (be aware, you risk losing them if you do this).

Beyond that, if the systems are solid, this type of business lends itself well to acquiring smaller customer bases and rolling them into the platform.

The Drawbacks

Technology risk is always present in this space, as platforms and standards evolve over time. Staying current requires ongoing attention, even if the core service feels stable.

Need I introduce AI as a threat? If you’re bullish and understand AI deeply, this could be an opportunity for you to roll our AI services to the customer base.

There’s also some exposure to commoditisation, particularly in connectivity and voice where pricing pressure can emerge. Is this a race to the bottom?

And while the revenue is recurring, the service still needs to be delivered consistently, so this isn’t a passive asset.

Final Thought

This is the kind of business buyers compete for. Strong recurring revenue, high margins, and deep integration into customer operations make it a very attractive asset if the underlying structure holds up under scrutiny.

My primary concern is what AI will do to this business. Perhaps it’ll destroy it, or be a great platform to launch AI products and services from.

If you want more details on either of these businesses or would like an introduction to the sellers, just reply to this email.

There was no deal. Strong pass on everything listed on the marketplaces.