For many entrepreneurs, the dream of "being your own boss" conjures images of long hours in a garage, building a product from the ground up, and struggling to find that first customer. But according to Mike Kuzma, a partner at the business transactions group of Spencer Fane law firm, there is a faster, more stable, and often more profitable path to business ownership: Acquisition.
In a recent episode of the Prairie Founders Club podcast, Mike shared his 15 years of experience helping buyers and sellers navigate the complex world of business transactions. His core message? You don’t have to start from scratch to build a legacy.
The "Silver Tsunami" Opportunity
We are currently in the midst of a massive demographic shift often called the "Silver Tsunami". Millions of profitable small and medium-sized businesses (SMBs) are owned by the baby boomer generation, which is now entering retirement.
Kuzma notes that many of these businesses are incredibly stable but may be operating on outdated systems. This creates a unique opening for younger entrepreneurs who are "light years ahead" in their understanding of technology. By acquiring an existing company and simply upgrading its CRM, software, or digital marketing, a new owner can significantly increase the business's value almost immediately.
Why "Boring" is Better
Kuzma often highlights opportunities in "unsexy" but essential service industries. While tech startups grab the headlines, businesses in trades like plumbing, HVAC, electrical, and medical practices offer reliable cash flow and proven demand.
These industries are ripe for acquisition because they already have:
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Built-in Infrastructure: You aren't just buying a name; you’re buying an office, furniture, and even basic supplies like toilet paper.
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Trained Teams: Finding talent is one of the hardest parts of a startup. In an acquisition, you often inherit "legacy employees" who know the business inside and out.
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Vendor and Supplier Relationships: You step into a long-standing supply chain that might have taken a new business years to build.
Buying "Runway" vs. Starting from Scratch
Starting a business is notoriously time-intensive. Kuzma points out that as a startup founder, you "wear all the hats", acting as the HR, legal, finance, and accounting departments all at once. This often leads to entrepreneurs working in the business rather than on it.
Buying an existing company allows you to "buy runway". Because the foundation is already laid, you can focus on pulling the strategic levers that lead to growth from day one.
Financing Your Acquisition: Can You Really Start with $0?
One of the most eye-opening parts of Mike’s discussion was the possibility of reaching the closing table with little to no money down. While SBA (Small Business Administration) loans are a common and effective tool, they aren't the only option.
Kuzma explains that many sellers view their business as their retirement plan and are willing to engage in seller financing. In these scenarios:
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The purchase price is paid out over time from the profits of the business.
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The seller receives a steady "annuity" of payments, which helps them spread out taxable gains over several years.
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If the buyer stops making payments, a promissory note often allows the seller to take back the asset, protecting their interests.
Due Diligence: Seeing the "Two Sets of Books"
When you're ready to buy, the most critical step is due diligence. Mike warns that small business financial records can tell two different stories. Owners often want to show minimal profit to the government (to lower taxes) but high profitability to their banker.
To find the truth, Kuzma recommends reviewing:
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Tax Returns: These show the most conservative financial picture.
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Internal Financial Statements: These often reveal the true gross profit and "Seller Discretionary Earnings" (SDE)—the total amount a business generates for its owner.
Legal Safety Nets: Protecting Your Investment
Acquiring a business is not without risk, and Mike’s job is to ensure you aren't "buying a liability". He emphasizes the importance of Representations and Warranties.
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A Representation is a statement of fact (e.g., "all tenants are current on rent").
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A Warranty is a promise that the representation is true.
If a seller omits critical information, like a tenant being $300,000 behind on rent, these legal clauses allow the buyer to hold the seller accountable after the deal closes.
The Hand-Off: Don't Let the Seller Just "Peace Out"
A "clean break" is rarely in the buyer's best interest. To ensure the business survives the transition, Mike recommends structuring a 2-to-5-year period where the seller stays on as a consultant or employee. This ensures that institutional knowledge, like key customer contacts and undocumented procedures, is successfully transferred to the new owner.
Final Thoughts: "You Can't Put Toothpaste Back in the Tube"
Mike Kuzma’s parting advice for aspiring entrepreneurs is to move slow and get the details right. Unlike a smaller investment, a large business transaction is often a "one-shot" opportunity. Once the money is out the door and the papers are signed, it’s much harder to undo a mistake.
Whether you are looking at a medical clinic, a plumbing shop, or a roofing company, the message is clear: the most successful way to "start" a business might just be to buy one that is already thriving.
About Mike Kuzma: Mike Kuzma is a partner at Spencer Fane in Omaha, Nebraska. He specializes in representing buyers and sellers in business transactions and commercial real estate. You can reach him at [email protected].
Next Step: Are you ready to see a real-world example? Prairie Founders Club members have access to a virtual case study where we walk through the step-by-step acquisition and scaling of an imaginary roofing business.
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