The 4 R's in Investing in Small Businesses - #4

How to quickly determine if you should invest time in considering a potential investment.

INVESTINGSMALL BUSINESSACQUISTION

12/13/20252 min read

Quick reminder — I’m Damon, former President of an in-room entertainment software and IT company (we sold solutions to Charter, Cox, and Foxtel that then went to their hotel and hospital clients). I stepped away earlier this year and am now searching full-time to acquire and operate one great business.

The other day a friend mentioned he’d been getting my newsletters but wasn’t totally clear on what I’m hoping to achieve with them. So instead of diving into technology trends in ETA as planned, I figured I’d focus on addressing exactly what I am doing and what I am looking for.

Two goals:

  1. Share what I’m learning about acquiring a small business — in case this path ever sounds interesting to you or someone you know. (Two people have already reached out to chat about it as a potential career shift.)

  2. Clearly explain the types of businesses I’m targeting so that, thanks to “selective attention,” you might spot one and think of me.

I use the 4 R’s to evaluate opportunities:

  1. Recurring Revenues — customers pay every month (or need the product/service regularly).

  2. Required — the offering is mission-critical, not just “nice to have.”

  3. Recession Proof — the company has been enduringly profitable through economic cycles.

  4. Relevant in 10 Years — the service or product will still be needed a decade from now.

While I will consider any business that achieves the 4 R's, I’m especially drawn to businesses in or adjacent to IT services and software services. Some concrete examples: hotel TV/entertainment platforms, guest Wi-Fi or PMS integrations, SaaS tools for multi-unit operators, specialized IT MSPs serving hospitality/healthcare, or maintenance/service contracts in those spaces.

I’m targeting enduringly profitable companies generating roughly $1–$10M in EBITDA (or equivalent owner earnings) where the founder is ready to transition over the next few years.

If you happen to know a founder whose business fits the 4 R’s — or who’s simply open to exploring exit options — I’d be grateful for an introduction. Happy to buy them coffee or hop on a quick, no-pressure call. Either way, thanks for reading and for any thoughts you might have.