Welcome to The Business Academy with Sieva Kozinsky. Here's what we have in store for you today:

1. How we paid $300k for $2 million in cash flow
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2. Selling a business for $115 million
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3. Don't buy this $6 million distribution business

UPDATE: The Business Academy is opening a spot for our one additional advertiser. But not just any advertiser. I send my email to 70,000+ smart investors like you who are seeking their next cash flow opportunity or plotting their next business to buy. I want to pick a partner my audience will love.

If you are interested, please respond to this email and we can provide more information.

I'm excited to announce our next Enduring Ventures Summit.

Last year we hosted an intimate gathering for incredible investors and business owners in the Enduring Ventures network. This year we're bringing it back with some spectacular guests, speakers and activities. I'm super excited for it.

Usually, we've kept this event to our investors and close network.

But this year I'm opening up a few spots for my readers.

To get details about the summit and apply to join, please fill-out this form:

​Apply Here​

Nike. Apple. FedEx. Chobani. Ben & Jerry’s. Under Armour.

What do they all have in common?

They all got their start with SBA loans.

Today, everyone wants to buy a business. But this trend isn’t new—it traces back to a pivotal moment in 1953.

Before then, buying and selling small businesses wasn’t common. Grow a business was a grind because access to capital was scarce.

So what changed in 1953?

The Small Business Administration was born.

President Dwight Eisenhower created the SBA to disperse government funds to support small business growth.

For decades, the SBA has quietly powered America’s entrepreneurial engine, rolling out programs that made it possible for small businesses to secure funding, grow, and thrive.

Without it, many of the world’s most recognizable brands might never have made it past the starting line.

From the SBA's official history:

The SBA program I want to talk about is the SBA 7(a) loan program, the most common one for buying small businesses.

Especially for first-time business buyers.

At Enduring Ventures, we financed our first two acquisitions with SBA loans.

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Sieva Kozinsky @SievaKozinsky How we financed our first two acquisitions: ~5% of our own capital ~10% investor capital ~20% as a seller note The rest financed with an SBA loan This is a common mix for first-time acquisitions. If you keep doing deals, eventually you’ll grow out of SBA loans and need to sub… https://x.com/i/web/status/1881739341367513436 10:23 AM • Jan 21, 2025 0 Retweets 26 Likes Read 6 replies

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As you do larger deals, you eventually outgrow the SBA loan program (the maximum loan under the 7(a) program is $5 million).

But it's a great program to start your business buying journey with. Here are a few of the basic facts:

• SBA 7(a) loans are the most common SBA loan.
• They can be used for general business purposes like working capital, equipment purchase, or real estate.
• Maximum loan amount generally up to $5 million for a business purchase, or $10 million for real estate
• Terms can extend up to 25 years for real estate, 10 years for other business types.

Here's a real-life example:

We used SBA to buy $2M in cash flow with only $300k down. Here's how the deal was structured:

• Purchase Price was $6 million (3x cash flow)
• Total down payment: $300k
• Seller financing: $700k
• SBA loan: $5 million
• We were actually buying 2 businesses and combining them, which made the transaction a bit more complicated. I don't recommend this for my readers.

In the first year, we were able to pull out the $300K we had invested upfront. Debt coverage was over 2:1, and the business was doing great.

If this was the only deal we did, and we just made sure the businesses didn’t fail… We likely would have more money than we’d need for the rest of our lives.

But there’s a real caveat…

We had to personally guarantee the loan.

This is the major catch of SBA loans. If you fail, you'll likely have to forfeit personal assets (maybe even your house!)

I recently learned from an SBA lender that the failure rate on these loans is 1-2%. That was MUCH lower than I anticipated. I had assumed it was 10%+. So if you are careful about picking the right business, you pay the right price, and you focus all your attention on it, your likelihood of failure is lower than you think.

The risk is real but often overstated in our own minds.

🔑Behind the Scenes of a $115 Million Exit

Many of us dream of selling a business for a massive payout.

This entrepreneur actually did it.

Check out his story of turning a viral 'meme', before that word existed, into a $115 million exit.

He bought the domain crackberry.com for $15k back in 2006. He could have flipped it for $150k a few months later, but decided to build something bigger instead.

I enjoyed reading about his vision, which all great entrepreneurs seem to have.

​Read the full story here

🔑 One interesting deal

Here's a wholesale distribution business for sale in Maine. Let's take a look to see if this deal is a pass or not.

What I like

First we have to strip out the real estate to evaluate the business.

The listing says the real estate is worth $3.3 million (which I'd want to verify myself).

But for now, let's just look at the business: It's selling for $3 million after you take out the real estate.

I like that the business has been around for 20 years, according to the listing. Now let's move on to what I don't like here...

What I don't like

At first glance, there's a lot I don't like here.

The multiple is too high (7x cash flow), and the margins seem incredibly low (only 6%).

Just based on those facts alone, I'd pass on this deal quickly.

Plus, the real estate appears to be overpriced. They're asking $160 per square foot, but a quick search online shows the price for this type of real estate in Main is between $100-120/Sq Ft.

I assume the price will have to come down significantly on this business.

I'll pay a high multiple, but it has to be a great business. With only $419k in cash generated on $6.6 million in sales, this does not appear to be a great business. And unless I have a clear edge or insider knowledge on a company, I immediately pass on net margins below 10%.

​Check out the listing here​

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Have a great week,

Sieva

P.S. I've been publishing more shorts on YouTube with some of the most interesting moments from my interviews. subscribe on YouTube if you haven't already to check it out.

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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