Why We Passed on a Good Deal (And Would Buy a Smaller One)

We just passed on a business doing $200k profit per year. A small but consistent amount.

It was a good business. Not distressed, not a fixer-upper. A genuinely solid operation. Someone else ended up acquiring it and they’ll probably do just fine.

So why did we walk away? And why would we happily explore something even smaller?

The answer comes down to a distinction that doesn’t get enough attention in the acquisitions world: the difference between a good deal and a good deal *for you*.

Why Small Standalone Deals Don’t Work for Us

When you run a holding company, every acquisition carries a cost beyond the purchase price. There’s onboarding. There’s the management attention required to integrate something new into the portfolio. There’s the overhead of another entity to track, report on, and support.

For a business doing $200k a year, the math doesn’t work at our stage. The time and energy required to integrate it properly would be better spent on something that moves the needle more. It’s not that the business is bad. The opportunity cost is too high.

Our standalone minimum is around $500k a year in profit. Below that, it’s hard to justify the distraction unless there’s a strategic reason to go smaller.

Which brings us to the exception.

So far, this post has been fairly straightforward “Don’t buy a business that is too small…duh”.

Unless….

When Smaller Deals Make Perfect Sense

But we’d happily explore a tuck-in opportunity well below our standalone threshold. The difference: a tuck-in isn’t a standalone acquisition.

We own a business called Proofread Anywhere, an online course that teaches people how to become professional proofreaders. It’s a solid business with a loyal audience and consistent revenue. But we’ve noticed something interesting about the people who discover it: not all of them actually want to be proofreaders.

Some of them want to build a freelance business. They want the freedom, the flexibility, the ability to earn on their own terms. Proofreading is just one possible path to get there.

A tuck-in that adds general freelancing skills (how to find clients, how to price your services, how to build a sustainable freelance business) would be too small on its own. But tucked into Proofread Anywhere, it changes the game in three ways.

1. It expands the addressable market

Instead of only serving people who specifically want to be proofreaders, we can now serve anyone interested in freelancing. That’s a fundamentally bigger audience. Someone who comes in wanting to learn about freelancing might discover proofreading as their niche, and vice versa.

2. It creates a platform for more tuck-ins

Once you have proofreading and general freelancing on the same platform, the playbook becomes clear: add more specialist courses. AI skills. Copywriting. Virtual assistance. Each one is a relatively small acquisition that plugs into the existing platform, audience, and infrastructure.

No single one of these courses would justify a standalone acquisition. But as tuck-ins, they’re highly accretive.

3. It solves the “now what?” problem

One of the biggest gaps in the online course industry is the space between learning a skill and making money from it. A lot of courses teach you how to proofread, or how to write copy, or how to use AI tools, but they don’t teach you how to get clients, set your rates, or build a sustainable business around that skill.

By combining skill-specific courses with freelancing fundamentals, we can take someone from “I want to learn something new” all the way to “I have clients paying me for this skill.” That’s a much more complete value chain.

The End Game

The vision for Proofread Anywhere is evolving into something like an unbundled Udemy specifically for freelancing. People come in, choose their skill track, and also learn the business fundamentals to actually make a living from it. Each new tuck-in adds another skill vertical to the platform.

It’s a roll-up strategy, but at the individual business level, not the holding company level. And it’s only possible because we were willing to go below our normal threshold for the right strategic fit.

The Discipline Part

Here’s the thing that ties both stories together: you can’t do the second deal if you’re bogged down by a bunch of deals like the first one.

Acquisition discipline isn’t about passing on bad deals. Anyone can do that. It’s about passing on good deals that aren’t right for you at this stage, so you have the management capacity, the focus, and the resources to pursue the ones that are.

Not every good deal is a good deal for you. And that’s fine. Someone else will buy it, and they’ll do well. The question isn’t “is this a good business?” It’s “is this the best use of our next dollar and our next hour?”

Sometimes a small tuck-in is worth more than a larger standalone. It depends entirely on what it plugs into.

*If you’re building through acquisition, whether it’s your first deal or your fiftieth, I’d love to hear how you think about what to pass on. Subscribe to The Onfolio Letter via the form below for more behind-the-scenes of acquisition strategy.*

If you want the full framework for how to evaluate acquisition discipline and the other 6 criteria most investors miss, I put together a free guide on evaluating micro-cap holding companies.