1504: How to Vet a Business Like a Private Equity Pro (Before You Buy It) w/ Carter Micklem
Ever dreamed of buying a business but felt completely out of your depth? This episode is your masterclass in demystifying the world of business acquisition. Carter Micklem, a former private equity VP, pulls back the curtain on the due diligence process, sharing the exact strategies institutional investors use to vet a company—and how you can apply them to your first (or next) purchase. He breaks down the difference between buying a business and starting a franchise, the critical data points to analyze, and why understanding the seller’s day-to-day role is the most overlooked factor in any deal. This isn't just theory; Carter used this exact playbook to leave his high-powered finance job and acquire his own successful lawn equipment dealership, which ultimately inspired him to launch The Diligence Pros. Tune in to gain the confidence and competence to make the biggest investment of your life the right way.
💡 What You'll Take Away For YOUR Business
- How to think like an institutional investor by starting with your criteria first, not the specific business.
- The key difference between buying a business (instant cash flow) and buying a franchise (a starter pack with strings attached).
- A breakdown of "operating due diligence" and why analyzing customer data, product margins, and employee roles is more important than just reviewing tax returns.
- Creative deal structuring secrets, like seller notes and earnouts, that can lower your upfront cash investment.
- Why the seller’s day-to-day involvement is the single biggest risk factor in a small business acquisition and how to properly assess it.
- How to remove emotion from the buying process to make objective, data-driven decisions that protect your investment.
- The step-by-step process for taking calculated risks, from starting a small side hustle to acquiring a multi-location business.
📝 About Carter Micklem
Carter Micklem is the founder of The Diligence Pros, a firm dedicated to helping entrepreneurs conduct institutional-grade due diligence when buying a business. He began his career in private equity, rising to Vice President where he led the investment and underwriting for numerous private companies. Feeling the entrepreneurial itch himself, Carter left the corporate world to acquire his own small business—a lawn equipment dealership in North Carolina. This firsthand experience of applying his high-level finance skills to a main-street business purchase gave him the unique perspective and inspiration to help other entrepreneurs navigate the acquisition process with confidence.
🎯 Carter’s BEST Piece of Advice for Wantrepreneurs and Entrepreneurs
“Take the calculated risk. Do your research… but, you know, take the risk. I think getting out of the corporate world is night and day. Once you kind of make it to the other side, you can't imagine yourself going back.”
📢 Memorable Quotes
- “Ultimately you're buying a business. Even if you're going to be the operator and it's your career, it's still the biggest investment you're ever going to make.” – Carter Micklem
- “We're not here to look for smoking guns, skeletons in the closet, or a rocket ship that the seller doesn't know about... It's more of a mosaic, you know, a lot of little pieces. Ultimately, you zoom out and you see the whole picture.” – Carter Micklem
- “You can't just trust because the bank approved you that you can afford that capital structure, or that that's a good idea to sign up for that.” – Carter Micklem
💡 Actionable Takeaways
- If you're looking to buy a business, start networking with local business brokers in your target area instead of just browsing online marketplaces like BizBuySell.
- When evaluating a business, go beyond the financials. Ask for operational data like customer lists, sales by product, and vendor agreements to analyze trends.
- Before signing an LOI, spend significant time understanding the current owner’s daily tasks. Assess how much of the business's success is tied directly to them.
- To de-risk your entrepreneurial journey, start a small-scale side business that requires a minimal investment to build your confidence and business acumen.
🔗 Links & Resources
