How Sarah Moore Bought a $20M Egg Carton Business with No Money

Sarah Moore is not your typical entrepreneur. Under 30, with no money, no experience, a troubled upbringing, and only a RAV4 to her name, she managed to acquire a $20M+ business, EggCartons .com, with zero cash down. 

How did she do it? Read on…

Meet Sarah Moore

Sarah's early life was anything but stable, she bounced around homes and believed she wasn’t worth the effort. 

This all changed when she met two families at crucial stages of her life who saw her potential. 

At 15, she met the Brackens, a family who took her in and saw past her tough exterior to the honest, gentle person beneath. They gave her the home and stability she’d never had.

Then came the Greens, the wealthy family she met at the diner where she worked. They saw her scrappiness and grit as keys to success. They gave her a job, funded her education firstly at Northeastern University, and pushed her to aim higher.

The two families gave her three important truths to carry forward:

1. I am without shame: I care more about championing my beliefs than social acceptance.

2. I am scrappy: I have an unwavering resolve to make a difference.

3. Everyone is worth the effort.

Note point #2 - she was scrappy.

She paid her sister to take the SATs for her because she didn’t believe in herself, even though she could put in the work. It was the fear of failure and disappointing the families who believed in her that led her down this path.

Sarah made it into Harvard Business School, and between her first and second year she heard about a "search fund" from a friend. The idea? You can buy a scrappy business and become the CEO overnight, no money or experience needed.

The light bulb went off.

She didn’t want to be someone else's b*tch. 

It was time to find her business. 

Step 1: Research

Determined to buy a business with no money down, Sarah spent over a year searching through hundreds of thousands of private businesses.

She had a friend scrape a database of private companies within 1.5 hours of her apartment from D&B Hoovers. 

The goal? To find profitable and stable businesses with a proven track record of cash flow to pitch to banks as having “real ‘collateral’”.

She narrowed her list down by excluding any businesses worth more than $100M, removed all legal and accounting firms or 7/11s etc. 

She kept an open mind and didn’t strike out any industry. 

But Sarah didn't work through this list alone. Mostly from Craigslist, Sarah found more than 50 interns to work out of her undergrad library and help her reach out to over 400,000 companies in around 1.5 years.

Her pitch? This was a private equity experience that they couldn’t find anywhere else. With full transparency on the table, they were coming along for the ride. 

The name of her “company” was Kenston Green. Old money sounding. 

Here was that original craiglist intern job listing: 

With most of the interns not attending the same university as Sarah, she managed to get hold of fake IDs from alumni to access the library.

Step 2. Cold Outreach

It was far from straight forward. Response rates were at an all time low and Sarah had to get creative on how she was reaching out to these businesses.

She wanted everyone to know about her, so she came up with the idea to fax thousands of businesses a photo of herself in a sweatshirt stating, "I want to buy your business."  Some owners even recognize her from those faxes today.

Sarah and her team also went heavy on cold emails.

The template looked a little like this:

The responses? Decent. As the revenue numbers were a little unreliable, some businesses reacted to some of the false numbers and either revealed their real numbers or at least their reply kick-started a conversation. 

Some of the responses however were more positive from the outset - praising Sarah for her research.

This is exactly what happened when Sarah cold emailed the owner of eggcartons .com.

"I harassed the owner until he replied," Sarah admits. But they did hit it off.

The business was essentially a wholesale distributor within the farming industry. Buying, storing and selling egg cartons.

She checked their revenue numbers - ok they’re legit. 

The owner had a strong domain name and 100+ variations in his domain portfolio to warn off any competitors - the brand had a moat. 

Time to negotiate. 

Step 3: Convince the owner to sell

Sarah had two prerequisites to quickly narrow down if this deal could be done: 

First, she would be the first to throw out a number, around 3.5x their yearly profits and then ask if she was in the rough ballpark of what they'd be looking to sell for. The owner said he could work with that range.

Second, she needed to make sure that the owner was able to do a seller’s note, which he was willing to do. 

Tick and tick. 

Sarah kept the deal extremely simple, emphasising the need to keep the terms on the sellers note clear and not have any fancy clauses or use Havard jargon. 

As a result, she hit it off with the owner and they were able to negotiate a valuation - $20M. 

Step 4: Raise the Cash

Sarah then contacted over 100 banks. "Most of them told me to F off," she laughs. 

What approach did she use in negotiating with the banks?

• Seller's Note as Equity: Sarah only approached banks willing to view the seller's note as equity. This was crucial because it reduced the amount of hard cash she needed to provide upfront.

• Debt Ratio: The bank evaluated the debt ratio, ensuring the business could handle the loan repayment. This meant the business's historical profitability was a critical factor.

• Bank's Priority: She made it clear that the bank would be prioritized over the seller's note in repayment, assuring the bank of its security.

• Track Record of Profitability: Sarah emphasized the business's years of profitable operations, convincing the bank of its stability.

• Belief in Leadership: The bank had to believe in Sarah's ability to continue running the business profitably. This required her to demonstrate her commitment and business acumen convincingly.

Finally, one bank agreed to an uncollateralized loan, structuring the deal with 75% bank debt and a 25% seller's note.

To ensure she was on the right track and admitting she was clueless, she overpaid an accountant for an audit, rolling the fees into the deal.

The papers were signed and Sarah was the proud new owner and CEO of eggcartons .com, without paying a single cent.

Step 5: 6Xing the Business 

Initially, Sarah viewed her purchase as an "egg company," but she soon realized from looking at their order history, the business was more about specialty packaging.

This strategic pivot was crucial to their impressive growth under Sarah’s ownership.

"40% of our business comes from things entirely unrelated to eggs," she notes. 

Anything that required separation or protection was their target market.

The client list is impressive, including Boeing, SpaceX, Disney, and Crayola.

Sarah has been hesitant to share revenue numbers publicly but as of last year, she confirmed it was less than $50M.

The business experienced substantial growth, especially during the COVID-19 pandemic, reportedly growing five- to six-fold.

When asked on the My First Million podcast on what wisdom she would share with herself during the company takeover: 

1. Hire and fire fast 

2. No drastic changes in the first year. 

She made both mistakes and paid for it, including modernising the phone system that led to over a week of no phones and unhappy longtime customers. 

Sarah has since gone on to own more businesses and expand her empire. 

She keeps a low profile which makes this story even more fascinating. Let alone her hustle, determination and smart strategy that enabled her to acquire a business and change the course of her life. 

Next up in The Entrepreneur Chronicles, he built and sold the Russian Facebook for €300M business, had to flee his home country, and went on to build a billion dollar private messaging app (with only 30 employees). Check your inboxes next week for the story of Pavel Durov, Dubai’s richest expat.

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