Business Buying Strategies from The Dealmaker's Academy

#345 What kind of business should I buy?

Feb 19, 2026

They debate which type of business to buy based on your end goal and why picking the wrong one wrecks future plans. They cover aiming higher on size and profit, three acquisition paths like escape or build-and-sell, and why recurring, boring businesses with strong managers win. Practical warnings on owner-dependent firms, timing, working capital and deal structure round out the conversation.

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ADVICE

Aim For 10x Income When Replacing A Salary

If buying to replace a salary, aim for a business that produces roughly ten times your current income to ensure life-changing impact.
Jonathan Jay gives the 10x rule example: a £50k salaried person should target ~£500k annual income from a purchase.

INSIGHT

Buy What You Already Understand

Buying businesses you already understand removes the learning curve and reveals predictable due diligence red flags.
Jonathan Jay notes owners often can't see cost savings and profit opportunities that an outsider familiar with the sector can spot immediately.

ADVICE

Target Fragmented Markets For Buy And Build

For buy-and-build target fragmented markets with many small businesses you can roll up into a larger, sellable platform.
Jonathan Jay stresses M&A activity above you matters: mid-size buyers acquiring smaller firms creates exit pathways.

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What Kind of Business Should I Buy?

If you're thinking about buying a business, this is the question that determines everything. Not how to fund it. Not how to structure it. Not even how to find it.

But what kind of business should you buy?

In this week's episode, Jonathan Jay answers the foundational question every serious dealmaker must get right and explains why choosing the wrong business is the fastest way to sabotage your future success .

Start With the End in Mind

Jonathan opens with a principle borrowed from Stephen Covey: Begin with the end in mind.

Before you even look at sectors or valuations, you need clarity on your outcome. Are you:

Escaping corporate life?
Growing your existing business?
Building a group to sell for seven or eight figures?

Each goal demands a completely different acquisition strategy.

If you want to replace your salary, Jonathan challenges you to aim higher than feels comfortable. If you want to scale your current company, acquisition is the fastest way to move the needle. If you want generational wealth, buy-and-build might be your path.

But the type of business you buy must match the outcome you want.

Why Most First-Time Buyers Aim Too Low

One of the most controversial sections of this episode? Size.

Jonathan argues that most first-time buyers go too small — and pay the price. Businesses making under £100,000 net profit often:

Depend too heavily on the owner
Lack proper management accounts
Have fragile teams
Leave no room for post-acquisition wobble

Instead, he shares what he looks for:

At least £1m revenue
At least £200k net profit
Stable margins (15–25%+)
Strong management in place
Recurring or repeat revenue

The effort required to buy a £200k profit business is not ten times harder than buying a £20k one. But the impact on your life absolutely is.

The Three Core Acquisition Paths

Jonathan breaks down three common strategies:

Escape the Day Job: Buy a business that produces serious income — ideally 10x your salary.

Grow an Existing Business: Acquire competitors, suppliers, complementary businesses, or geographic expansions.

Buy-and-Build: Acquire smaller businesses at lower multiples, combine them, and sell the larger group at a higher multiple.

He explains:

What fragmented markets are
Why M&A activity above you matters
How multiple arbitrage works
Why strong management becomes critical at scale

And importantly — why one deal can change your life.

The Worst Types of Businesses to Buy

Jonathan doesn't hold back here. Avoid:

Owner-dependent businesses
Fad businesses
Highly volatile or "spiky" profit businesses
Overleveraged acquisitions
Companies reliant on family members
Businesses where relationships walk out the door with the seller

He also explains why buying too small can mean buying yourself a job.

And that's not what this is about.

Funding, Risk and Structure

This episode also covers:

Why over-leveraging kills deals
Why working capital matters more than most buyers realise
Why your first deal is the most important
Why corporate structure must be set up properly
Why personal guarantees should be limited and contained

Jonathan's position is clear:

Deal number one sets the foundation for everything that follows.

Get it right, and you build momentum. Get it wrong, and you may never do deal two.

The Big Takeaway

Buying a business isn't just about buying something. It's about buying the right thing.

With:

The right margins
The right management
The right structure
The right funding
And the right strategic fit for your long-term goal

Clarity at the beginning prevents regret later.

Listen Now

If you're serious about buying a business in 2026 — or even just thinking about it — this episode gives you the strategic filter you need before you start looking at opportunities.

Listen now and make sure your first deal is the right one.

If you're serious about buying a business – and avoiding the mistakes Jonathan outlines – book a free Clarity Call with one of his team:

👉 dealmakers.co.uk/clarity

You'll get 15 minutes of expert insight to help you decide which next step is right for you – whether that's attending a Deal Club evening, joining the 3-day Foundation Programme, or stepping straight into the Mastermind.

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