Buy Then Build - Book Review

By Lorenzo Ayres

Author: Walker Deibel

The first company Walker Deibel bought was his father's book printing company. He says so flatly in chapter 12. Chad Troutwine's foreword fills in the part that makes it worth telling, which is that Deibel bought a book manufacturer at the exact moment when most everyone under 50 was running from anything to do with printing. He turned it toward digital book production, grew it into the largest two percent of printing companies in the country, and sold it. Before that he had done the other thing. He had a venture-backed enterprise software company called ViewPoint, built on SharePoint, with an all-star team and an oversubscribed raise and a Fortune 500 ex-CEO as lead investor. His own description of it in chapter one is that it had "all the hallmarks of success, but no actual success." So the man who wrote the anti-startup book lost on a startup and won on his dad's print shop. That is the whole credential and I think it is a good one.

The thesis is one sentence on page two: "the startup phase is a company killer." The arithmetic under it goes like this. The average American startup opens with about $65,000 of capital and, by the folk number he uses, fails around 90 percent of the time. The average venture-backed company raises anywhere between $30 million and $50 million and still fails about three quarters of the time. Only four percent of American companies ever get past a million dollars of revenue. Against all of that he sets the default rate on Small Business Administration loans, right about two percent. Then comes the affordability math, which is the part that actually lands. That same $65,000 used as the down payment on a ninety percent SBA loan, buys a $650,000 company. At a three times multiple of adjusted earnings, that is a business throwing off somewhere around two hundred and sixteen thousand a year. The money that buys a house, or buys a lottery ticket on an idea, buys you a seat as CEO of a company already in the top four percent.

Now, about the financing, which is the part of this book worth the price on its own. The seller financing and SBA material runs through chapter six, Deal Making, and comes back in chapter 10, Making an Offer, and the two ideas turn out to be connected in a way most acquisition writing gets backwards. He walks the SBA 7(a) structure properly. The bank lends up to 90 percent against the business's own assets, the buyer brings a 10 percent equity injection, and the term is usually ten years. His worked example has a loan of one and a third million at six percent costing just under $15,000 a month, against average monthly cash flow of $33,000. Then he tells you the cost. The loan is secured, you personally guarantee it, and you may have to pledge your house. If the thing fails owing seven figures, in his words, "that's your personal debt to address." And because the SBA wants every remaining partner on the guarantee and lends only pro rata, the structure practically forces you to take 100 percent of the company on day one. Which means asking the seller to stay in with a note or an earnout is, as he puts it, not a reasonable expectation. So the financing everybody recommends is the same financing that strips the seller's skin out of the game. Almost nobody says that out loud and he does.

I read that chapter differently than most people will, because I lived the other version first. Enterprise software was the darkest stretch I have had and I was miserable for most of it. Big valuation, very little revenue, money to burn, no product market fit. What it taught me is that building something nobody has ever built is a one percent game, since most of the time the reason nobody built it is that nobody wanted it. So in 2025 I bought instead. Four hundred acres in Jay, Oklahoma, 34 buildings, about 50 units. The park had been shut down, but the land, the buildings, and the trails were already there, and a lender could walk the property and see it. I am also the guy in Deibel's warning paragraph. I have personally guaranteed all of the park's debt, twice, and we are refinancing about nine and a third million across seven notes into a USDA facility quoted at $13 million. His stated ideal, on page 222, is a commercial loan with a fixed rate and no personal guarantee. I have never been offered one. Anybody about to sign their first acquisition loan should understand that the guarantee is not a formality you renegotiate later.

The most useful page for me right now is the stress test, and it is not the famous part. Take the annual debt service, add the minimum salary you would have to draw even in a bad year, and that sum is the floor. Below it the seller’s discretionary earnings cannot carry the company. Then you work backwards into how far revenue can drop before you hit that floor. It is the calculation a USDA lender is running on us right now. It is also the one I should be running on forty new cabins before the first guest walks into one, because new beds do not fill on the day they open, they ramp. The other line I use is the title of chapter seven, Buy for the Future, Pay for the Past. You price on trailing numbers and you underwrite on what you are going to do with it. Where that breaks is interesting. We are looking at Rockwell Lake Lodge, 668-acres in an unzoned township in Luther, Michigan. It has no trailing numbers worth pricing off, so the past you are supposed to pay for does not exist, and the rule gives you nothing.

The honest limits. That 98 percent success rate people quote from this book is not a survival statistic. It is one minus a loan default rate, and Deibel says so himself in the same paragraph, with the qualifier that it holds if you equate not failing with success. A company can service its SBA loan for 10 years and never pay its owner a dollar and still count. The other side of the comparison is not like for like either, since about half of new employer businesses are still alive at five years. That is not a 90 percent failure rate by anyone's arithmetic. The boomer retirement wave he calls the $10 trillion tsunami has been forecast since the mid 2000s and keeps arriving late. The book is also a funnel into his own accelerator, and the blurb on the cover came from a paid review program. It is practical rather than deep, and it does not need to be. Who should read it: somebody sitting on anywhere between $50,000 and $200,000 with an idea they have been talking about for two years, anybody told their whole adult life that founders start things, and every manager who could run the place better than the owner does. The direction holds even if you discount every number in here heavily. Buying a boring company that already works beats starting an exciting one that does not, and the reason is not courage or vision, it is that revenue on day one is worth more than a good idea on day one.

About Lorenzo Ayres

Lorenzo Ayres is a business builder, dealmaker, and owner of America's Outdoor Adventure Park in Jay, Oklahoma. Here he reviews books on investing, deal structure, and business strategy.

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