How to Write an Acquisition Thesis (Industry, Geography, Size) With a Worked Example
Every guide to buying a small business tells you to write a thesis before you source a single deal. Almost none of them show you a finished one. So most first-time buyers write something like "profitable B2B services company in the Southeast, $500K to $2M in earnings," send a hundred generic letters, and hear nothing back.
Below is what a thesis actually contains, the four constraints that make one work, and then a complete example built on real public-records data for one vertical in one state, down to the counts you'd be working from.
What an acquisition thesis actually is
An acquisition thesis is a written, one-paragraph answer to four questions. What industry will you buy in? Where? What size of business? And what observable evidence tells you a specific owner might be open to selling?
The document does two jobs. First, it's a filter. Scouly alone tracks 173,769 companies across seven verticals, and that is a slice of a slice of what exists. Nobody works a list that long by hand. A thesis cuts it down to a ranked few hundred. Second, it's the backbone of your outreach. An owner who gets a letter that names their industry, their town, and the reason you picked them reads it differently than one that opens "Dear business owner."
Search funds formalized this practice. The vehicle was conceived in 1984, and Stanford GSB's entrepreneurship center has published studies on search fund performance since 1996, which is why most written guidance on buying a small business carries a searcher's vocabulary. You don't need a fund or outside investors to borrow the discipline.
The four constraints
1. Industry: one vertical you can explain
Pick a single industry and be able to say why in two sentences. Good reasons are structural: demand that ignores the economy, licensing that holds new competitors out, real estate the business already owns, a base of independent owners with nobody lined up behind them. "I saw it on a list of boring businesses" is a bad reason, because the owner will ask you why their industry, and they can tell when the answer is borrowed.
2. Geography: one state, ideally one metro
Small services businesses are local, and so is everything you'll need after closing. Staff, licenses, lenders, the customers themselves. There's a data reason to stay narrow too: business registries run at the state level, so every state you add is another registry to learn. A single state keeps your records work in one system and puts every target within a day's drive.
3. Size band: anchored to something verifiable
Most buyers state their size band in SDE or revenue, numbers no public record will confirm before an owner shares financials. A more honest anchor is what banks have actually lent in your vertical. Across the SBA 7(a) and 504 FOIA files, the 2,580 funeral home borrowers Scouly tracks show a median peak loan of $697,250, with the 25th percentile at $367,000 and the 75th at $1,370,000. Bands like that exist for every vertical in the deal benchmark tool, and they tell you what lenders in your industry found financeable. Set your band against that distribution and you can screen on loan size before you ever see a P&L.
4. Signals: what makes a target timely
Industry, geography and size describe the pool. Signals rank it. The strongest publicly visible ones are an SBA loan approaching maturity, a registry formation date old enough to imply an owner near retirement, and a local market fragmented among independents with no consolidator squeezing them. The full argument for the loan-maturity signal is in our guide to SBA loan data as an acquisition-timing signal. A thesis without a timing element leaves you writing to owners in no particular order, which is the same as writing to nobody in particular.
Why a narrow thesis gets more conversations
The instinct is to stay broad so you don't miss anything. In practice broad theses produce generic letters, and generic letters get deleted. An owner considering the biggest decision of their working life responds to the buyer who did the homework.
Narrow also changes the math of your own effort. A hundred letters spread across twelve industries in eight states is a hundred cold intros. A hundred letters inside one vertical in one state means that by letter thirty you know the trade associations and the names owners keep dropping. Reply quality compounds. And when a reply comes, you can talk about their market specifically instead of pivoting to learn it.
Common mistakes
Defining the pool by earnings you can't see. "At least $750K SDE" filters nothing at sourcing time. Screen on verifiable proxies, then confirm earnings after contact.
Borrowing an industry from a listicle. Every "best boring businesses" article produces a wave of identical letters to laundromat and car wash owners. Pick from evidence you gathered.
Skipping the timing signal. A list ranked by nothing gets worked alphabetically.
Geography by vibes. "The Southeast" is a weather map. Name a state.
Endless revision. A thesis is a commitment device. Give it 50 to 100 owner contacts before you judge it, then revise on real reply data.
Worked example: funeral homes in Georgia
Here's the method applied end to end, using Scouly's live counts.
Industry. Funeral homes. Demand doesn't track the business cycle, establishments and directors are licensed at the state level, and most independents are family firms two or three generations deep where the recurring story is heirs who chose other careers. Death-care consolidators have been buying for decades and concentrate on higher-volume firms in dense markets, which leaves the smaller community firms to individual buyers. The full case is in our funeral home sourcing guide.
Geography. Georgia. Scouly tracks 121 funeral homes in Georgia, 66 of them in the Atlanta metro. The Augusta metro, which crosses the line into South Carolina, holds 10. That's a pool you can realistically exhaust: big enough that a dozen conversations are plausible, small enough that you can know every firm in it by name.
Size band. $367,000 to $1,370,000 in prior SBA borrowing, the 25th to 75th percentile of the 2,580 funeral home borrowers in the FOIA files. Round it to $350K to $1.4M when you write it down. A band anchored to what lenders already financed is a band you can screen on before an owner shows you anything.
Signals. Georgia has 90 SBA-financed funeral homes among its 1,817 tracked SBA borrowers across Scouly's verticals, and statewide 229 of those loans mature between 2026 and 2028 (76 in 2026, 74 in 2027, 79 in 2028). The state's median tracked loan is $520,000. Rank the 121 by loan maturity first, registry age second, local fragmentation third.
Written out, the thesis reads:
I am looking to buy one independent funeral home in Georgia, preferably metro Atlanta, with prior SBA borrowing between $350K and $1.4M. I'll prioritize firms whose SBA loans mature by 2028 and whose registrations date to the 1990s or earlier, in counties where independents still outnumber consolidator-owned locations.
Two sentences. A stranger reading it knows exactly which businesses qualify, and an owner receiving a letter built on it knows you meant them.
From thesis to ranked list
The manual path runs through the FOIA loan files and the Georgia registry, and our pillar guide to finding off-market businesses walks every step. The faster path: build your thesis on Scouly for free. Pick the vertical, the geography and the criteria, and it ranks every tracked company against them with the underlying public records linked on each profile. The Explorer tier includes 10 full profile unlocks at no cost, and you can browse every covered vertical and metro on the Markets index first. Nothing on Scouly is listed for sale, and it never contacts owners. The list and the letter are yours.
Frequently asked questions
What is an acquisition thesis? A short written statement of what business you intend to buy, defined by four constraints: a single industry, a specific geography, a size band, and the observable signals that make a target timely. It filters the universe of small businesses down to a ranked list you can actually work, and it gives your owner outreach the specificity that earns replies.
How narrow should an acquisition thesis be? Narrow enough that the resulting target list is in the low hundreds at most. One vertical in one state is the standard shape. Funeral homes in Georgia yields 121 tracked companies on Scouly, which is a pool one buyer can fully work in a few months of letters and calls. If your criteria return thousands of matches, tighten the geography or the size band.
Do I need a search fund to write one? No. Search funds formalized the practice, the vehicle dates to 1984, and Stanford GSB has published performance studies on it since 1996. The thesis itself is useful to any buyer: self-funded searchers, independent sponsors, holdco buyers, or an operator buying a single company to run. If you ever do raise capital, a written thesis with a defined pool is also the first thing investors ask to see.
What size of business should a first-time buyer target? Anchor the band to verified lending in your vertical instead of unverifiable earnings claims. Funeral home SBA borrowers show a median peak loan of $697,250 nationally, with a 25th to 75th percentile range of $367,000 to $1,370,000 across 2,580 borrowers. Those are amounts lenders in the vertical actually approved, so a band drawn from them is one you can screen on today.
How many targets should a thesis produce before outreach? Enough for 50 to 100 owner contacts, since off-market reply rates are low and conversations take months. In the Georgia funeral example the full pool is 121 firms, with 229 SBA loans statewide maturing between 2026 and 2028 supplying the timing layer. If the pool can't support 50 contacts, widen one constraint at a time.