Clarity Before the Chase: Writing Your Investment Thesis

Before you start searching for deals, take time to write your investment thesis. Clarity is capital, and it costs nothing.

There’s a strange moment that happens in the early stage of every acquisition journey. You feel the energy building. Spreadsheets are open. Alerts are set. Domain names are registered. Outreach lists are growing. You’re doing everything right, at least by the standards of motion.

But beneath all that activity, there’s a quiet uncertainty. You’re not sure what you’re chasing or why.

Most of us begin there. We fall in love with the idea of buying a business long before we know which one, or what kind of life we actually want to live once we own it. It feels productive to look for deals, to send emails, to network. But it’s also a distraction from the hard, quiet work that really matters: thinking.

Writing your investment thesis is not an administrative step. It’s the first act of ownership.

Because what you write now will shape every deal you see, every investor conversation you have, and every decision you make later when things get complicated.

If you skip this stage, your search will feel like walking in fog. You’ll confuse motion for progress. And worse, you’ll risk buying the wrong company, one that might fit your spreadsheet but not your soul.

This is the first installment of a six-part Buyout Diary series about the journey of acquiring a business, from developing an investment thesis to sourcing, financing, negotiating, conducting due diligence, and finally, taking ownership. But before any of that begins, there’s something deeper to explore: the power of clarity.

The Thinking Season

Every acquirer goes through a period that I call the thinking season. It’s the stretch between knowing you want to buy a business and knowing which business you should buy.

It’s an uncomfortable stage. The world tells you to move fast, but your future depends on slowing down.

In this season, there’s nothing visible to show. No LOIs signed, no capital raised, no impressive LinkedIn updates. It’s just reflection, the kind that feels unproductive but creates the deepest leverage later.

It’s during this silence that conviction forms.

Conviction doesn’t come from activity alone. Rather, it comes from alignment, when your ambitions, values, and model finally point in the same direction.

If you’re in this stage now, don’t rush out of it.

Use it.

Spend mornings reading, afternoons walking, evenings writing. Talk to owners. Visit factories. Observe how people work. You are, in effect, rehearsing ownership.

That’s where the investment thesis begins. It begins not on Excel, but in awareness.

Why Clarity Comes Before Capital

When I first began shaping my own HoldCo, I thought I needed capital.

What I actually needed was clarity.

Every investor conversation began with the same question:

“So what do you buy, and why?”

It sounds simple, but it’s astonishing how many people in ETA can’t answer it clearly. They know what others are buying, but not what fits them.

If you can’t explain your strategy in one sentence, then you don’t have a thesis yet; you only have an intention.

And that’s fine. That’s how it starts. But the difference between people who close deals and those who drift isn’t funding. It’s focus.

A thesis is the antidote to distraction.

It stops you from chasing every opportunity that lands in your inbox. It filters noise, it attracts the right people, and it disciplines your search before the real pressure begins.

But more importantly, it reveals your temperament.

The type of business you purchase and how you purchase it reflects the type of owner you are.

What You’re Really Writing

When you sit down to write your investment thesis, you’re not producing a document for investors. You’re writing a personal operating system for ownership.

It’s a declaration of what you believe about business, value, and time.

Every professional thesis, whether for a HoldCo, search fund, or private equity firm, addresses a set of timeless questions:

• What kinds of businesses will you buy?

• Why do they create enduring value?

• How will you operate or govern them?

• What risks are you accepting, and which will you never tolerate?

• What does success mean to you, not just financially but personally?

The beauty is that your first draft doesn’t need to be right. It only needs to be honest.

Your thesis will evolve as your understanding deepens. But it will also serve as a mirror. Every paragraph will quietly show you what you value, what you fear, and how you think.

When I wrote mine, I realised that what I wanted wasn’t just freedom.It was stewardship. It was the privilege of continuing someone else’s legacy with care and integrity. That realisation changed everything: my filters, my financing philosophy, even the industries I looked at.

That’s what writing does. It shows you who you are becoming.

Know Your Model, Know Yourself

Before defining what you’ll buy, you must decide how you’ll buy it.

Each acquisition model carries not just a financial structure, but an emotional architecture.

The HoldCo model suits the patient. It’s for builders who think in decades, not exits. The goal isn’t speed but compounding, and the aim is to create a small ecosystem of businesses that can grow quietly, guided by governance rather than pressure. But the trade-off is solitude. You’re building without a set finish line, often without external validation. You must find meaning in the work itself.

The Search Fund model offers structure and mentorship. You receive a salary, investor support, and guidance from those who’ve done it before. But the trade-off is oversight. Investors expect accountability and an eventual exit. If you value autonomy above all else, that can feel like constraint.

The Self-Funded model sits between the two. You have total independence, but also total exposure. Every decision, whether good or bad, is yours. The risk is not financial alone, but emotional. Many burn out trying to do everything alone.

So before choosing your model, ask yourself:

What kind of tension can I live with?

There is no perfect path. Only the path that fits your temperament, your family, and your philosophy of ownership.

Your thesis will crystallise once you’re honest about that.

Define Your Investment Filters

Once your model is clear, you can start defining your filters, which are the parameters that keep your judgment sharp when excitement rises.

Most experienced acquirers eventually develop a mix of quantitative filters and qualitative filters that shape how they see the world.

Quantitative filters might include:

• Annual revenue range (e.g. €1–3 million)

• EBITDA margin (e.g. 15–25%)

• Recurring revenue share (e.g. 70%+)

• Geographic focus (e.g. within two hours’ drive)

Geography might sound like a boring subject, but it’s not. Your operational radius defines how you’ll live. If visiting the business twice a week becomes exhausting, you’ll quietly start resenting ownership.

Clarity on geography is clarity on lifestyle.

Qualitative filters might include:

• Founder-owned and succession-ready

• Essential B2B or service-based industries

• Low customer concentration

• Culturally aligned with your values

These filters aren’t barriers; they’re anchors. They prevent emotional drift when deal fever sets in.

But filters alone aren’t enough. You also need an investment rationale, which is a clear explanation of how this type of business creates durable value.

Maybe the sector is fragmented, ripe for consolidation.

Maybe you bring operational expertise that others lack.

Maybe you simply love the business model and could see yourself owning it for decades.

Whatever the reason, your rationale must be simple enough to explain to a friend over lunch. If you can’t, it’s not yet clear.

Micro-Proof Your Thesis

Here’s something rarely discussed: you don’t have to get your thesis “perfect” before moving. You can test it in small, low-risk ways and quietly.

Talk to five business owners in your chosen sector.

Ask them what keeps them awake at night, what’s changing in their market, and who’s buying businesses like theirs.

Visit trade fairs, read industry magazines, shadow a local firm for a day.

Each conversation will either confirm or reshape your direction.

I call this micro-proofing your thesis: small acts of research that make the abstract concrete.

You don’t need AI tools or massive databases at this stage. You need proximity. You need to feel what real ownership would be like in that world.

If your energy rises after these interactions, you’re in the right space. If it drains you, pivot early.

Micro-proofing is how clarity becomes conviction.

Understand Risk Before It Finds You

A credible thesis doesn’t hide risk; it integrates it.

Professional investors respect honesty far more than optimism.

When you name risks clearly, you show maturity, and self-awareness.

In small business acquisitions, the usual dangers are familiar:

• Dependence on the selling founder

• Hidden employee turnover

• Customer concentration

• Excessive leverage

• Cultural mismatch after takeover

The goal isn’t to eliminate risk, but to know which ones you are equipped to manage.

If you come from a finance background, operational chaos might stress you out less than cash-flow volatility.

If you come from operations, you might tolerate messiness but hate debt.

Your thesis should reflect that alignment.

Remember: risk management starts with self-knowledge, not spreadsheets.

Define How You’ll Create Value

Every strong thesis answers three questions:

Why this industry? Why now? Why you?

This is where you explain how your ownership actually adds value.

Will you grow margins through better systems?

Will you build a roll-up strategy across fragmented markets?

Will you focus on people and process improvements that unlock hidden profit?

The levers don’t need to sound revolutionary. In fact, the best ones are simple: structure, clarity, communication.

The real insight is this: your edge often comes from who you are, not what you do.

If your background is in finance, governance might be your advantage.

If you’ve led teams, cultural alignment could be your strongest asset.

Articulate how your personality and experience intersect with the business model. That’s where investors and eventually sellers will sense authenticity.

The One-Page Thesis

Ultimately, all of this information should be condensed into a single page: your investment summary.

It should state:

• What you buy: sector, size, and location.

• Why it works: your investment rationale.

• How you grow it: value-creation plan.

• How you protect it: risk and governance approach.

• What success looks like: your 5–10-year horizon.

That page is more than a summary. It’s your compass.

You’ll use it to filter deals, guide investor talks, and keep yourself centred when the noise of the market pulls you in all directions.

When you revisit it a year later, you’ll see how your thinking has evolved. This is proof that ownership begins long before acquisition.

The Quiet Discipline of Writing

Writing your thesis is emotional work.

It’s easy to read, talk, and plan. It’s much harder to sit in a quiet room with your own ideas and no distractions. But that discipline is the same one you’ll need later as an owner. This discipline is the ability to think alone.

So take two hours this week.

Find a silent space.

Start with one sentence:

“I acquire companies that…”

Finish it honestly.

Don’t polish it, don’t perform. Just write until it feels like you.

Then refine it using this structure: rationale, filters, risks, and value creation.

When you’re ready, use the Investment Thesis Workbook I’ve prepared to transform your notes into a living document. This isn’t homework; it’s self-definition.

👉 If you want to start right now, download your free Investment Thesis Workbook here.

Closing Reflection

Before you source, raise, or call a single broker, write it down.

Because if you don’t know what you’re looking for, you won’t recognise it when you find it.

An investment thesis is not just a business plan.

It’s a statement of identity. It shows the world and yourself who you are, what you stand for, and what kind of owner you are becoming.

When I finally wrote mine, everything aligned.

The industries made sense. The model fit. The financing conversations felt natural.

Writing down my goals clarified not only the kind of company I wanted to buy, but also the kind of person I wanted to be while owning it.

That’s the real beginning of every acquisition journey.

Next week:

We move from clarity to action by discussing how to build your sourcing engine without losing focus.

Until then, remember:

Clarity is capital.

And the first deal you ever make is with yourself.