Buy it. Build it. Back it.
The weekly guide for professionals who want to own something, with or without quitting the day job.
Hi Future Owner,
If you have a job, or recently left one, you have three ways to own something: buy a business, start one, or back someone else's. This week is about the first door.
IN THIS ISSUE
Key points this week
How a milkshake salesman in his 50s bought McDonald's, and how he paid for it.
The SBA introduced new rules that make the process easier for buyers and made it dependent on an appraisal and/or QOE.
Microsoft offered buyouts to about 60,000 employees while growing 19% YoY.
Which Door First?
Buy it: Acquire an established business with existing customers and revenue. Best for people with management experience and capital/network who want to own and run their own company.
Build it: Build a business from scratch. Best for people who have identified and demonstrated customer demand that solves a problem and are willing and want to do everything themselves.
Back it: Invest in a business(s) acquired or operated by someone else. Best for people who want ownership without managing daily operations, or signing PG, or leaving your job.
This week: Buy it.
BIG STORY
The salesman who bought McDonald's
In 1954, Ray Kroc was on the road selling Prince Castle Multimixer milkshake machines. He was in his early 50s.
One order didn't make sense to him. A single hamburger stand in San Bernardino, California, was running eight of his mixers at once, so Kroc went out to see it for himself.
What he found
Dick and Mac McDonald had cut their menu to a handful of items.
Their kitchen ran like an assembly line.
They had already licensed six other locations.
Kroc asked to franchise the system nationwide, and the brothers agreed to take 0.5% of gross sales.
The money man
In 1956, Kroc hired Harry Sonneborn, a former finance executive at Tastee-Freez. Sonneborn's idea was for the company to own the land under each restaurant and lease it to the franchisee at a markup. It became one of the most important financial decisions in the company's history.
The buyout
By 1961, Kroc wanted to own McDonald's outright.
The brothers agreed to sell for $2.7 million.
Kroc didn't have the money, so Sonneborn arranged the financing.
The brothers kept their original restaurant but lost the right to the name, so they renamed it The Big M.
When Kroc died in 1984, McDonald's had 7,500 restaurants in the U.S. and 31 other countries.
Here's what I took away: Kroc bought a business that already worked, had product-market fit and increasing demand, and had systems that allowed it to run without its founders.
The brothers had proven the model.
Kroc had the vision and drove the expansion.
Sonneborn provided the financing, capital, and the structure.
Many first-time buyers think they have to handle every part of a deal themselves. What they need is a business with a proven product market fit, good unit economics, some type of “moat” or defensible competitive advantage, and the right people around them.
That's what thousands of retiring owners in HVAC, plumbing, pest control, landscaping, and accounting firms are selling right now. Nobody in the family wants to take over, and you can buy it on terms for 2-3 x cash flow, use the business to pay it back, and your career skill set, whether it's sales, finance, or operations, can be applied here to an asset you own that benefits you, not your current employer. The key is always to have compounding work for you by increasing cash flow and profits and multiplying that increase by 3-5x in value.
KEY TAKEAWAYS
Look for a business that runs on a scalable and proven process. If the owner has to be there every day, you're buying a job. That can be okay, but know what you are buying.
Get the buy right. The owner can get the price or the terms, but not both. Always buy and make sure the Seller has something to lose if it has problems.
Get every important part of your life in order and on board- spouse, kids, finances, and your mental state, before you commit.
If a milkshake salesman in his 50s could buy McDonald’s with borrowed money, you can buy a plumbing company with Seller Financing or an SBA loan.
TOP 3 THIS WEEK
The SBA introduced new rules that make the process easier for buyers.
The new rulebook (SOP 50 10 8.1) took effect Oct. 1. Every SBA-financed purchase now needs an independent valuation, and buyers must qualify on past earnings. This will keep Seller valuations and terms in check.
On an Oct. 20 lender call, SBA added that cash gifts count fully toward your equity injection. You need a minimum 10% real cash injected into equity.
A seller who keeps less than 20% of the business can be released from the loan guarantee after 24 months, if payments have been current for the past 12.
The Fed held rates
On Oct. 28, the Fed kept its target range at 3.75%-4.00%. Two voters wanted another quarter-point hike. I believe rates get hiked in December and keep hiking until we either get inflation down or have a recession to reverse course and start cutting.
The WSJ Prime Rate stays at 7.00%. SBA loans over $350,000 are capped at Prime plus 3 points, so the ceiling is still 10%.
Microsoft offered buyouts to about 60,000 employees
The Oct. 26 offer covers roughly a quarter of its workforce, at the VP level and below, as the company spends about $175 billion on AI infrastructure this year.
If a buyout lands on your desk, it can fund a business down payment. The message is we are growing fast with fewer people needed. The long term is pretty clear. Fewer opportunities in one of the best and most important companies in the world. Expect the same everywhere.
PERMANENT EQUITY PODCAST
A weekly show with people who:
left their jobs to buy a company, whether it worked or not
started one from scratch
stayed in their jobs and invested in someone else's deal
run funds in the ETA space that readers can invest in
Know someone with a story? Hit reply and tell me.
COMMUNITY SPOTLIGHT
Elias Youssef ran the business for 16 months before he bought it
Elias Youssef is 26. He bagged groceries at Kroger at 17, dropped out of community college once he started earning in sales, and was selling about $3 million a year in appliances by the time he was 20. Today, he owns 36% of a plumbing, heating, and electrical company in Denver, and he got there without putting his own money into the deal.
The search: hundreds of cold calls to contractors. Almost every set of books showed a loss.
The deal: a Denver water-heater company was more than $1.1 million in debt. Elias offered to run it first, then buy it. The seller agreed, giving him full control and a three-year option to buy.
The fix: gross margins were in the 30s, where a good plumbing shop runs near 60%. He raised prices and changed how the techs were paid. He aligned incentives.
The result: revenue went from about $60,000 a month to about $200,000 in 16 months. His lender then approved a $1.3 million loan, and a seller note cut his equity requirement to 5%.
Today: a professional operator runs the company as president. In Elias's words, "Majority equity is majority work."
"Majority equity is majority work."
RESOURCES & EVENTS
Boring Businesses That Quietly Make Millionaires in 2026 and Beyond (Michael Crow)
Michael Crow examines five businesses worth considering for acquisition in 2026: laundromats, equipment rental, plumbing, pest control, and retirement plan administration. He discusses acquisition costs, cash flow potential, and each business's operating characteristics. The episode also covers three criteria he uses to evaluate potential acquisitions before committing capital.
Minnesota Carlson Entrepreneurship Through Acquisition Conference Minnesota, USA · November 13, 2026
The University of Minnesota's Carlson School of Management will host its 2026 Entrepreneurship Through Acquisition Conference, bringing together business buyers, searchers, investors, lenders, attorneys, and acquisition advisors. Sessions will cover developing acquisition strategies, conducting due diligence, structuring transactions, and managing businesses after closing.
Independent Sponsors Summit: West Coast Los Angeles, California · December 1-2, 2026
iGlobal Forum will host the Independent Sponsors Summit, bringing together more than 200 independent sponsors, family offices, private equity investors, lenders, and transaction advisors. Sessions will examine deal sourcing, underwriting, acquisition financing, transaction structuring, and execution in the lower middle market. Attendees can participate in up to 22 curated one-on-one meetings, with more than 11 hours allocated to networking across the two-day event.
If the right deal came along, would you sign a personal guarantee on the loan?
INSIGHT OF THE WEEK
Michael Crow explains how two buyers paying $2 million for the same business can face different financial risks.
Michael Crow explains how two buyers paying $2 million for the same business can face different financial risks. One pays the full amount at closing, largely through bank financing, while the other pays $1.2 million upfront, $500,000 through a seller note, and $3200,000 through a performance-based earn-out. Crow identifies five terms buyers should evaluate: cash at closing, seller financing with a performance clause, earn-outs, working capital requirements, and key customer and people risk. These terms determine how the buyer and seller share financial and operating risks after the acquisition.
QUOTE OF THE WEEK
“Bear in mind that the measure of a man is the worth of the things he cares about.” - Marcus Aurelius
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