Evaluating Industries & Revenue Quality in SMB Acquisition - The Intentional Owner #16

In this episode of The Intentional Owner, Sam Rosati and Kaustubh Deo dive deep into two interconnected topics: the real tradeoffs of self-funded search versus traditional high-income careers, and tactical frameworks for evaluating industries and revenue quality in SMB acquisition. They open with a candid conversation about what draws people into ETA, weighing lifestyle freedom and long-term upside against the more predictable, but often relentless, trajectory of big law, PE, and IB. Then, they shift gears into practical diligence frameworks, sharing how they've each evaluated revenue quality, industry dynamics, and growth opportunities in their own businesses. From win rates and customer retention metrics to local market analysis and pricing strategy, this conversation is rich with hard-earned insights. They discuss: Why expected returns in self-funded search may be lower than other high-income career paths How to measure and evaluate revenue quality using real customer data Frameworks for assessing industry attractiveness as a first-time searcher The role of local market dynamics, backlog trends, and customer segmentation in due diligence Common pitfalls in organic growth assumptions and the limits of TAM analysis A tactical conversation for anyone considering ETA or looking to sharpen their diligence process. Links: Kaustubh on Substack - https://bigdealsmallbusiness.substack.com/p/read-me-first Sam on X - https://x.com/Sam_Rosati Follow along with the guys' fitness tracker! - https://bit.ly/3T4EpHw Topics: (00:00:00) - Intro (00:00:48) - Catching up (00:07:02) - The alternatives to Self-Funded Searches (00:20:07) - The pitfalls of an industry-agnostic Search (00:22:34) - Thoughts on Revenue quality (00:31:46) - Key data points and gut checks to know if the business/industry is healthy (00:36:52) - Developing organic growth (00:42:10) - Discovering win-rates in Search (00:45:35) - Closing questions!