5-10x Earnings Acquisition

Brad Jacobs built multiple billion-dollar companies through acquisitions across different industries. Here's his framework for identifying and acquiring companies.

Target Industry Characteristics

• Looks for huge industries with high fragmentation
• Focuses on profitable small businesses lacking capital to scale
• Seeks companies with roughly $30M in revenue that can be doubled

Acquisition Strategy

• Buy small businesses and add 30-40 employees to scale them
• Provides capital to sustain growth where others can't
• Integrates powerful software systems to manage hundreds of acquisitions
• Example: Used "Rental Man" software to integrate rental businesses

Sales Team Structure

• Hires hungry, talented salespeople with:
  • Low base salary ($25-35K)
  • High incentive-based upside
  • Must be willing to make 99 calls per day
  • Goal: Build $1M book after first year

Employee Characteristics

• Seeks people who:
  • Score high on "need to win" scale
  • Score low on "need to be liked" scale
  • Can handle high-volume sales activity
  • Are motivated by significant performance-based compensation

Success Examples

• United Waste Management
  • Became 5th largest solid waste business in America
  • Earnings grew 55% annually for 5 years
  • Went public 8 months after starting
  • Stock price increased 50% annually for 5 years
  • Sold for $2.5B

Integration Strategy

• Buy landfills in small markets
• Acquire local trucking companies serving those markets
• Optimize routes and maximize pricing
• Focus on margin improvement
• Build scale for further expansion capability