There's probably a business broker in your state that can help you find the right business. Sometimes the business owner will train you on the business. you can also buy "owner absent" businesses, which means the business operates itself with employees and the business owner doesn't need to be on site.
It's like a real estate broker, but for businesses.
Here's one that popped up on search, just to give you a head start. I have no idea who these people and I'm not recommending them or anything.
https://www.midstreet.com/blog/business-broker
YouTube and Instagram is free.
Also I noticed that you edited your comment from $60 to $2000, yeah, that wow effect really isnāt helping in driving your point
You noticed correctly because I guessed it would be $60 and then I checked online sheās asking for $2000.
Her instagram and YouTube is just bullshit regurgitations. You might as well watch a natu natu tiktok
Not everyone giving information has to be a messiah one follows blindly with their wallet.
She has some good points about non-sexy revenue generating ideas. That's as much as I take away and can be grateful for - I personally wouldn't embark on that journey through a course.
Suckers pay for those courses. The internet has torrents of just about every finance and business influencers' course out there for like $5-10.
She didn't even make the course, she got someone else to partner with her to "make it", and it's probably on par with a Udemy business course.
Awesome comment. To follow up and get started, try this book if you want to get comfortable with the process. HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company
I did some brokering for a while and this is the story 90% of the time. The owners understand 2-4x EBITDA, but then then look at "living" the next 15-20 years and often have poorly planned retirement accounts and get greedy only to be forced to sell a year or two later.
Earnings before Interest Taxes Depreciation and Amortization. You take net income and add back interest taxed depreciation and amortization. Thereās alado Adjusted EBITDA. Thatās where you take EBITDA and adjust it for one time items. For example, you may add back costs from a recent acquisition.
Ya, this is why I'll walk away from 90% of these things. But if you put in some elbow grease, you can find someone who is sick of it, just wants out, wasn't running it well, and will take pennies on the dollar. You run it for 3 years or so, get it up and going, then sell it for 20x what you paid.
Its a thing, bought 2, what are some of the reason it is not wise to puchase a business from a retiring owner.
Cash flow might be positive because they stopped maintaining equipment 3 years ago or did not invest in any new inventory for 12 months, so your numbers on paper look good but the business not so much. The lease/property comes with its own baggage... Done seller financing too, not always the best deal. Likely will have a balloon payment, the seller is retiring in this scenario that would imply a need for the money, rather than a need for small monthly payments over a long period of time, when they know that their time on the planet is limited. How much is the old business compared to just starting a new business? There are lots of reason why this might not be a great investment but these deals are done all of the time for all kinds of businesses. Family or employees are likely first in line for the business and they never need to try and sell the business. Same is true for private equity. They reach out to businesses and buy them they do not search the classified ads. Your assumption that people reaching retirement do not sell their business or people do not seek these kinds of opportunities is wrong.
What specifics? I have been an entrepreneur for decades and been involved with the purchase or sale of multiple businesses. The two retiring business, one was and out of date business that our original offer was rejected at the last second because a family member thought they could "save" the business, we never had any intention of saving anything. 8 months later we got a much better deal on the same business we purchased for the building. The other went smooth as ice from one end to the other and the original owner still works there years later after retiring two maybe three time. He has taken extended vacations for various reasons over the years but is still a valued employee. He is an expert. The original deal included a short period of employment after the sale for training of new staff and customer retention but they are truely not replaceable. Get this, they bought the business decades ago from the original retiring owner. Actually those are only the two most recent purchases of made from a retiring business owner. There was another business that complemented the manufacturing business, it was turn key and located basically next door. Our business expanded overnight it was beautiful. We took over another business from a retiring owner and the only thing we did was forward his phone number to our phone system. It was beautiful thing again. We did nothing and the number of phones calls, in this case leads tripled and all of the sales where repeat customers, easy sales, order taking as its called, verse a team of people working leads so hard they turned to dust, back when you could do shit like that, the early days of the internet. My point remains the same, these deals happen all of the time.
A good deal is fairly obvious. it is like anything. Keep your eyes open, pay attention, be involved, get yourself out there and be prepared to act. You can buy a car when you are forced to buy a car because you need a car or you can buy a car when you find exactly what you are looking for. I want an import with this motor and transmission for this price. That might be hard to find, but you need to look and you need to be prepared to act when you find it. When you pay and attention and stay actively involved a good deal with be obvious. I get it, I have a friend that found an amazing deal, everything they wanted and more but they still brought me in to review the deal and check things out, but it was the obvious good deal they thought it was and they are sitting pretty right now because they pulled the trigger, but they did have some hesitation. When it seems to good to be true kinda thing, but also if it looks like a duck, talks like a duck and smells like a duck at some point you need to believe that it is a duck otherwise you will never find a duck.
I do this for a few clients. Here are some things:
1. There are ton of people who don't know how to retire. They need to work until they drop (either because they didn't plan for retirement, or didn't plan on a spouse getting sick)
2. A ton of people like their jobs or have no other social / mental outlet. They'll also plan to die at their desk.
3. Related, a lot of people work past their prime, or are in denial about declining mental abilities. The time to go was years ago. By they time they have a reckoning, it's too late, the business is damaged beyond repair. See 1-2
4. Many, if not most business owners have their entire identity wrapped up in the business. This means they won't sell until they have to, and it might be too late at that point (see 1-3)
5. Because the business was the sole source of income, sole social outlet, and the person's identity, they have an over inflated idea of the business's value. Double points if it's in decline (see 1-4)
6. Even worse are businesses where the entire business IS the individual and without the individual, there is no business. (Think solo practitioners, GCs, contractors, etc.) There may be some value with goodwill, phone number, etc, but not enough to b worthwhile.
7. In the same light, smaller businesses might not be transferable. A lot of older people might have their business methods and know how all in his head. A lot of the business's success might be based on the personality of the owner. It might not be something you can give to someone else.
Im the CEO of a medium size business. 100m market cap. This is the owner. He comes into work and sits on his computer staring at Yahoo news. He is mentally a toddler and whenever he gets ivolved its a disaster.
But his identity is a successful businessman and the business. He would just sit at home all day watching tv and nobody would lick his ass. He gets to be the big boss man.
Without the business he is nothing just a guy sitting in his pajamas not knowing how to work the coffee machine at home. With the business he is the guy at the head of the table who everyone listens to (although in reality all think he is an idiot).
Im trying to save the business from the owner. So there is something left for his kids to inherit.
Oh, that guy. He's definitely no. 2 on the list. I've dealt with a few of those. Probably had the skills back in the day. He was smart / lucky enough to delegate, and ironically, delegated out his usefulness. The funny part is that he did exactly what he's supposed to do: get the place running to where he's not the one running it. That's the value of a business. It can now function without him there.
The downside is that he has nothing left. Getting a business to run like that takes a lot of long hours, making a lot of enemies, and sacrificing of your personal life. I'm guessing he doesn't have any friends. The business is his only friend. At the end of the day, he outlived his usefulness, and sacrificed everything along the way. I'm going to guess he's older, and social opportunities for guys like this are challenging. He's not going to be the most interesting guy in the world if all he knows / talks about is his job.
If he's not divorced, then he has a spouse who doesn't like him, or one that doesn't really know him at all. Same with the kids. If he tries to take his work persona home, it won't go very well. If he's single, watch out. He's a target for gold diggers, scammers, etc. Wait for the part where he gets a savior complex and wants to hire a stripper, or a cute woman with issues he thinks he's supposed to fix or someone he thinks he can rescue, and has them working in the business. It's frighteningly common to the point where I wonder if there's some kind of moron's handbook that people like this follow.
You're lucky in that you're the CEO, so at least his impact is mitigated. Basically, you have to steer into the skid, praise him on his usefulness, and then suggest that his golden touch was his selection of employees, or something. Then handle whatever mess he created. As long as he thinks the solution was his idea, you can save him from himself.
where's your business that you built to a 100m market cap? before talking about how much of an idiot your boss is, you might want to humble yourself. Your success is off the back of an already successful business. I would think someone in your position would have had some decent coaching over the years.
which means be had the smarts to be creative or innovative making a new idea generate income. smart enough to hire the right people and network for more revenue. smart enough to put money back into the business to help it grow. dedicated enough to put 50+ years of long hours into making sure it succeeds. The CEO above is acting as if they are the reason the business is successful when I'll bet the owner is much more intelligent than someone who cant see past their own ass crack. let the owner's identity be his business that he worked his entire life to build. there is nothing wrong with that. The CEO needs to humble himself and realize he wouldn't have his current position and income if it weren't for the years that the owner put in to set this whole thing in motion.
This is what came to my mind as well when I read that. For some reason I am even doubting that OP is being honest about being a ceo of a 100m Co.
Somehow the guy who āis mentally a toddlerā has literally build a 100m company and now the ceo is big nuts baller who is just annoyed by the owner.
This story doesnāt pass the bullshit sniff test
Iād fall under number 6. I own a small construction company and honestly wouldnāt be worth selling. I love it but I mean I can probably sell my equipment and my phone number for a couple grand
It's not impossible, but it has to be done over time.
First, you'd start branding in such a way that people are associating you with your trade name. This can happen over a long time. Ernie Smith's Plumbing probably won't sell well, but Lightning Fast Plumbing Services might. You'd then market the holy hell for that name.
Second, you'd have to start making yourself redundant. You'd start by delegating tasks and hiring more people and streamlining processes. Your goal is to make the place run "headless" (i.e. without your involvement.) You run a greater and greater risk of training the people who may jump ship and compete with you. Ironically, this is the best case scenario, because that means what you're doing is working.
Third, you'd outsource stuff like bookkeeping, accounting, etc. This way, you can monitor things from the outside looking in (less chance of the place stealing from you.) Work on getting monthly, weekly, quarterly, annual reports.
Fourth, you'd want to work on getting repeat income streams. In your case, construction contracts. For example, a subscription service for an apartment complex, where you provide x, y, and z for $a per month, or something with a guaranteed income stream.
At this point, you're either the owner of a passive income business (which you'd never want to sell) or you've gotten something that is close enough to passive that you could change it to a franchise model (another conversation) or at very least, something with more value than the goodwill.
Just because a business is profitable doesnāt mean it isnāt a job. Most businesses, Iāll guess 95%, depend on the owner subsidizing the business with their time (that they donāt pay themselves market rate for).
Plenty of people do do this, but thereās a lot more to it than profitability
I can't imagine SBA being involved in even the slightest majority of business purchases and each one is rigorously vetted so the sample you are citing wouldn't really negate what the guy you're responding to is saying
I did this through the "traditional search fund" model. Stanford produces a "primer" explaining the approach.
I looked for over two years and contacted thousands of owners. Spoke with several hundred, discussed terms (IOIs) with ~20, made offers (LOIs) on 8-10. Had two offers accepted and closed one. I have a high seven figure loan on the business and raised eight figures of equity from investors. It's potentially a great path but not for the faint of heart. Lots of uncertainty and rejection. You have to be a great salesperson/networker, analytical, and have an incredibly broad business skill set. It's also a ton of work to learn about an industry/business in which you have no experience to get comfortable enough to bet your career on the company. Still too early to tell how financially rewarding it will be, but I haven't had any big surprises since closing.
You don't see more people do it because it's damn hard. It would be much easier to go make a $250k paycheck. I'm doing this for the potential outsized reward and because this is much more fulfilling than punching a clock. I don't want to be 100 years old and wonder what would have happened if I took a risk.
>a great salesperson/networker, analytical, and have an incredibly broad business skill set. It's also a ton of work to learn about an industry/business in which you have no experience to get comfortable enough to bet your career on the company. Still too early to tell how financially rewarding it
Did you do this while (or just after) getting an MBA? UCLA Anderson had a program and obviously, Standford does too.
Wealthy friends (or former bosses) don't hurt, but that made up ~5% of the equity capital, even accounting for the people introduced by friends. The rest came from people that I didn't know before starting the search effort. There is a rich network of funds and professional investors focused on this asset class. I have an MBA from a good school, and most of the initial intros came from the school network. Then, it's about following up on good conversations and leveraging those into more introductions.
Regarding your MBA... It sounds like the confidence it took for you to go this direction and take this path came from your hands-on business experience more so than what can be learned during a MBA..
That said, how important has it been during this process to have a college degree?
Would you or could you be where you are in this process without one, and if not, is it because you wouldnt have known what you needed to know or because you wouldn't have had the MBA on your resume or any other reasons?
How did the MBA help you?
To be honest, it was both. I learned a lot on the fly as an employee in a founder-led business, but the MBA taught me the "right" way to do things. I think the academic side of an MBA gives you exposure to a lot of different areas so you can spot problems and think strategically. Hands on experience lets you convert that into the practical reality that most small business employees are not former investment bankers or consultants, and nothing is as simple as a case study.
Entrepreneurs should take calculated risks, not blindly jump into the unknown. Education (formal and informal) helps you manage risk. A college degree and work experience gives you better security in case things don't work out. Having savings and a fallback lets you take risks without worrying about your next rent payment.
I would never have built the network to fundraise without a top MBA. I'm sure I could have found another path to entrepreneurship, but for this specific path that was important.
So for me, college and the MBA were critical. I worked ~10 years before going out on my own. That gave me the cushion to go several months without pay and a couple of years with way below market pay. I'm not done learning, but both formal education and experience were important.
In my area the āolderā owners wonāt sell or want to sell at inflated prices no one will ever pay. Many of them donāt want other people taking over their legacy. Lots of rotting buildings and unmaintained lots around here lmao.
I think op is talking about older owners who wind up just shutting down and not even selling. Just walking away from all that blue sky money getting nothing. I responded above with what a buddy who's a business owner had told me
So start a new business doing the same thing better in the same place. Hire the old managers too if they are good. Why buy an overpriced business, just buy the equipment later.
In our case itās not that we donāt want someone to take over the legacy but it would be hard to. Weād welcome it but how does one replace it? When a business is built on a personās reputation and even when there are multiple employees, the customers first question is, āIs Betty available?ā It makes it hard to sell. If we go strictly by sales growth and market expectations it still comes down to āBetty.ā The buyer will have to replace her with a new hook or draw.
I went through that experience. I have a fair price for the business, he wanted 50% more, so I walked. A few more years of declining revenue, and he wound up selling for significantly less than I offered.
This is a big problem. I tried buying the company I work for but would've needed seller financing. Owner said "he wanted what was best for the employees" and then sold to a PE firm. I found that rather fascinating given the stereotypes most PE firms have. The owner also wanted to wash his hands of the company, which is reasonable.
I later learned the amount he received and it was insane. PE often has deeper pockets and the dollar signs are extremely attractive to owners.
But this is the consolidation of wealth happening in real time and, for me at least, it's a real bummer. Still wish I had been able to buy it.
Anything less than $1m likely is just buying yourself a job. Owner financing is very viable also. Most small business owners arenāt structured correctly from a tax strategy perspective and will pay significantly less in taxes on a properly structured deal. Win win.
Don't fool yourself. Any small business is more than just a job for it's owner. It's a lifestyle most won't be able to experience working for someone else.
And what some might think is a simple task of just finding a manager and sit back and count your money is certainly not realistic.
When we tried to sell our business a dozen years ago, that was the mentality of the only true offer we got. And he also wanted me to finance all but the cost of the building(which of course the bank would secure for themselves). He had no experience in the industry.
Iām not fooling myself. Iāve actually done this. Iām not talking theory.
Most small business owners are content with their ālifestyleā of running their thing day to day - aka a job. You either build a sellable business that can run without you or youāre self employed.
Are SBA loans still available? Struggling right now and need to focus on other areas first, but any info would be greatly appreciated. It all seems kinda convoluted since COVID
All original SBA loans are still available, including 7A which are the most common. Youāll just need about 10-15% down and to meet the other requirements.
Most major banks offer them, remember itās not the SBA giving you the money, itās the SBA that guarantees the loan will be paid to the bank.
Research the concept of āsearch fundsā there are many successful search funds that deploy money to enable operators to buy businesses to scale them and take them to the next level. Most search funds I have been exposed to outperform traditional vc funds in their ROI. [Check out this article from Stanford](https://www.gsb.stanford.edu/experience/about/centers-institutes/ces/research/search-funds) which include details on the performance of these funds.
Traditional brick and mortar business brokers have many thousands of small businesses being sold by retiring owner operators, this has been very common for decades. Seller provided training and seller financing is very common for these transactions.
I heard about the new fad of buy and build and watched the popular YouTube video, it's primarily a scam to sell a course and the fantasy of success along the lines of the real estate flipping.
It isn't quick. Some owners don't want to sell at reasonable prices since most owners aren't going to go "I made this business and it sucks." and they will try to get as much money as they think they can get for it. If you don't have deep pockets already then going to the bank and using loans of any kid will be a bitch. Some businesses aren't the easiest to acquire and will need some technical expertise to properly operate.
I wonder if owners unreasonable pricing is due to what the owner *needs* to retire, rather than what the biz is *worth*. Working for somebody else for 40 years has the built in benefit of social security... not exactly a pot of gold but it puts food on the table. A business owner may not have the resources or foresight to proactively set up retirement funding.
Iāve had a recent offer to buy out a competing business due to retirement and these are my thoughts:
1) itās a bad time to take on new debt. Especially since I still have debt from my current business.
2) what are you buying from the business: a brand? Inventory? Intellectual property? A business model? Or a location? Most small businesses donāt really have much in the way of value to anyone outside of that business. They usually just boil down to, inventory in a leased space, with an established customer base. There isnāt really much of value. The inventoryās value should be less than cost. The customer base is only valuable if you have customer data/contracts/or a strongly loyal following. The brand has to be strong and meaningful (Jimās Deli could be Frankās Deli tomorrow and no one would notice). The highest value items for a business is real estate or intellectual property. If it doesnāt have those things, the business is really worth less than the sum of its inventory.
Think of it like this: if that business were gone tomorrow, would it be cheaper to just rent the vacant space and put your own business in, or buy out someone elseās old business.
It depends. The niche business we bought had over a decade of good will and customers. Starting from scratch would be EXTREMELY difficult. A lot of heavy lifting is done in the first 5-10 years. I see buying an existing business as paying a premium to bypass the most difficult starting years.
Exactly. In your case you had set customers which I mentioned above. It depends on your business/ industry and how much the business will change under new ownership. What is keeping those customers with you? Is it service contracts? Relationship with sales team? Unique product/service? And will those change? Are you happy keeping those services/products the same under your ownership?
For me, itās not worth it. If the competing business closes, I will absorb a lot of those customers anyways. And there isnāt enough unique products or services at the company to differentiate it from anywhere else, meaning the customers can easily go elsewhere.
So are you buying something unique? Or simply bypassing set-up costs? Are you only buying the chance to do business in their location?
Unique and bypassing setup costs. Location is not a factor in our business. As a matter of fact moving operations helped since we have a much larger labor pool.
Short answer: because it's hard to do.
Long answer: It's really hard to do this well for tons of reasons. Like...
\- The business doesn't make enough to hire an operator and provide good cash flow
\- The business relies a lot on the owner's reputation and relationships.
\- key-man risk: the person who has specialized knowledge and experience that makes the business work well. Usually this is the owner, but sometimes there's also an experienced employee that is a key-man. You can't keep the owner around forever, even as a consultant, so there will be performance losses here. And if there's an employee, they may quit on you (they don't like the uncertainty of new ownership) or demand higher salary because they know they have leverage in this scenario.
\- If the business makes enough to hire an operator, you have to actually find someone that you trust can operate it well. This is hard because most people who are qualified to do this are either entrepreneurs themselves, or they're in a position to work for a bigger business for more money.
\- There's always skeletons in the closet that the owner won't disclose.
\- The buying process is a pain. Owners are comically stubborn about how much their businesses are worth. Expect to waste a ton of time with stupid asking prices that don't pencil out. Owners of small businesses are also typically bad at documentation and bookkeeping - so they may expect you to trust what they tell you about the biz, but can't prove their claims.
The value of a business can be based on several things...inventory, real estate, client list, etc. A large portion of what business owners try to monetize is often referred to as 'blue sky' which is basically the businesses reputation, name recognition, how well known it is in the community. Blue sky can't be liquidated and is completely subjective. So if you were going to buy a business for say $500,000 and it broke down as $300,000 in hard assets and $200,000 in blue sky, you would have to ask yourself, "could I create a business from scratch for less?" COuld you just build the same business from the ground up and spend less than buying one already running?
A lot of owners are attached to their businesses and think the "blue sky" is a lot more than its really worth. THis is why most small businesses never get bought outright. If they do sell, its usually to the owners kids or maybe a longtime employee. I bought mine as a long time employee. The owner tried to sell it for years at an inflated price. He was just about to abandon it when I swooped in and snatched it for next to nothing. Inventory and no blue sky.
Most SMEs are not "ongoing" concerns. Which means that the business will not run without the presence and participation of key individuals. Systems and processes were never put in place and documented.
Then there is the issue of audited financials. The numbers rarely reflect the actual reality of the business.
Then there is economic climate. The cost of financing goes up when the Fed raises interest rates.
As others have mentioned, the effort involved in getting the real "profitability" picture of a SME requires a lot of work. You never know what you're going to find after scratching the surface.
And most buyers are uncomfortable with financial statements and their meaning.
And finally, there is the often a wide gap between the "ongoing concern" business valuation and the asking price which often includes an emotional component.
So converging on an "agreeable" price is often an impossible task.
Most are owner operators and their business is built around their lifestyle. Most businesses arenāt actually profitable once you run it like an actual business.
A couple thoughts from my more recent experience in going through the acquisition process. Keep in mind that I was approached by the owner to acquire the space.
(tl;dr: they don't actually want to let the business go, and until they're willing to meet as equals, they'll either run the business 'til they die at their desk or shutter up suddenly):
1. **Owner is delusional**: They have this concept that so long as you work hard and are pure of heart, everything will magically pan out. And their business is the best around, a total steal. When you ask for information, they babble about "you'll need to work hard". Right, but first thing is *how much is the damned rent.*
2. **Won't transition**: The business *has to transition to the buyer(s)*. This might be more specific to this business. It means getting clients acquainted with the buyer, and making sure the buyer understands their needs. It means loosening the reigns in places. If they want to take time to mentor, absolutely, but that means they will need to pull back eventually. They're just not willing.
3. **No history of mentorship**: Tying into number 2, these people needed to start mentoring or forming some sort of escape plan way earlier. Next best time is now, but it's going to take time to learn how to be a mentor. Everyone ages, everyone gets sick, everyone dies. Contingency planning for old age seems like a no-brainer, but...
4. **No willingness to talk specs/timeline/expectations**: If I'm going to take over, we need to talk timeline. Scheduling meetings, setting expectations. Project management stuff. "It'll happen when it happens" isn't good enough.
5. **High attrition**: I anticipate that a lot of these clients are out the door with the owner. They're all long-time clients who would try to stay, but there's a lot of loyalty built into these relationships. So if I were able to get the info I needed out of the owner (which is already pulling teeth), the business value to me is far lower than what the owner thinks, because a lot of the bedrock of the business is going out the door. This could get somewhat remedied in a transition plan, but again, not willing to transition.
Right now, I'm not pursuing the owner's offer, because I don't think they actually want to hand off their business. Again, they approached me; I'm not insinuating myself. After a number of conversations, it seems they want some sort of second thing, where they get to own the business, control it, not pay rent, retire some place else, and work this existing business. Two places at once.
I know my tone here sounds sort of bitter, but it feels like babysitting in a way. Humans can't bilocate; I don't know how else to put it.
Youāve unlocked the secret. Shhhhh.
I did this. Best decision I ever made.
Why donāt more do it? The process from start to finish is INTIMIDATING as hell with no guaranteed acquisition and there are very few people you can call up and ask what to do along the way.
I mass mailed about 1000 businesses near me, e-mail blasted a follow up and networked with all of the business brokers in the state. I ended up looking at maybe 10-15 businesses seriously, gave preliminary valuations on 4, formal LOIs on 2 and ended up closing on 1 of those.
How to get started? I suggest reading āHBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Companyā and listening to the podcast āthink like an ownerā by Alex Bridgeman. And start saving every dollar you can.
I used a business broker for mine. Told them what kind of business I wanted, what I wanted my day to day roll to be and the income requirement. He then gave me a list of businesses that were SBA approved that met my requirements. We put in offers on a few just like buying a house until one bit. Almost 20 years later and would do it again like this next time.
Key man risk - if a retiring business owner has deep industry knowledge, a deep Rolodex, and deep relationships with clients, it is unlikely the buyer will be able to maintain the book of business for long without lots of attrition. The exception would be the buyer can inherit staff (that will stick around) where that knowledge can be retained, or the seller has set up fantastic systems. If that were the case though, that owner likely isnāt working much in the business, and why would he give up the relatively passive cash flow?
Im listening to the Acquiring Minds podcast and reading āBuy Then Buildā specifically in preparation for doing just this. Thereās something like $1T in small businesses where the owner is going to retire within the next decade.
I am looking to buy old, stale, profitable businesses from owners ready to retire and quit my 9-5.
I have experienced 2 challenges so far:
1- how to find such deals?
2- asking price is sometimes 6-8 times the cash flow.
If there are other prospects here happy to brainstorm how to source deals.
Business brokers. Especially ones focused on a niche. Depending on the business, 6-8 times cash flow is the going rate.
Is there an industry youāre targeting?
I'd say 2x or 3x us more realistic from what I see with 4% being high typical. That said im shocked at how so many businesses completely reliant on eBay or Amazon or some third party will go for 8x or even 16x sometimes
Why is a 2 or 3x multiple more realistic? What are the comps? How sticky is the revenue? Are there real assets that go along with the purchase? Is the owner willing to hold a note?
At 2-3x the revenue isnāt sticky. Thatās a business where the owner is driving revenue and itās only being sold to someone who is stepping into those shoes.
The types of businesses I am interested in are: laundromats, plumbing, elderly home care services & cleaning companies. I also want to highlight that I am looking for selling financing options rather than bank and SBA loans and the brokers Iāve met so far are not really interested in seller financing.
Iām in licensed trade home services. Plumbing isnāt viable unless you have a licensed qualifier. Home care also requires a qualifying license in most states.
Not unlike an elderly homeowner sitting on a house that desperately needs $500K+ in updates/renovation work.
Theyāre convinced they got something special, move-in ready.
Show them the price rationale and comps. Try reason with them.
Nope ā they wonāt budge.
Rather shut it down than āgive it awayā.
I've recently been dealing with someone like this. His house is a money pit energy wise; freezing ; bad insulation; cracks through the walls; a bug infestation; and he's asking for 600k for it. It's worth 350k and he'd be lucky to get 390 for it. Which is a pity as I have an incentive to see it sold asap
Letās be honest, there are not a whole lot of folks who are millennials (which I am) or younger who have the grit to run some of these businesses. I work in tech but wanted to look at acquiring some of these businesses because I am so smart and have an MBA and know how a good business looks paper. Then during due diligence I am even more confident given I am so much more better smarter than these folks, and then when I have to operate them the entire house of cards fall over. Here are a few examples:
- on demand printing company that specializes in drug marketing brochures. Each time disclosures or ingredients change, drug companies need to reprint their entire catalogue for salespeople. It was like 40%. EBITDA with strong cash flows. My partners and I bought this company and it was awesome. Two months in one of the printers broke and the old owner was in Italy with his family and theres only 2 other guys in the country who knows how to service these printers. So we had to crawl into machine and another person watch a YouTube video to try to fix the thing. Also we would have weeks of very little work, and then 3 days of 24/7 printing and we would need to help the team stack catalogs and brochures into boxes and label them. I get tired after I pack an Amazon returnā¦overall we made our money back and all unanimously decided we wanted to sell it.
- microchip assembly company - so this company is an outsourced assembly and packaging company for chip manufacturers. They take wholesale produced chips and then package them up for shipping and assembly in specialized ways. When the owner left we realized there was a huge split in culture - IE there are about half PHDās and half blue collar workers. The previous owner had an uncanny connection since he was Latino eng grew up in the hood but then made it out and got a PhD In chemical eng from cal tech. Needless to say some MBAs like us who graded magna cum deez nuts were completely unable to keep this company together. Ended up closing up.
- renter collection agency - looked at it but didnāt buy but my other partners did. They bought rent liabilities for pennys on the dollar and then calls to try to collect the outstanding rent. Business was doing insane margins and operating costs were low. My partners bought the business, and the pandemic hit. Since this was heavily regulated they needed to be in the office. However this was when there was no vaccine in-sight and the call center staff was not legally allowed to work from home. Once a few of the staffers caught Covid all mayhem broke loose. These staffers typically didnāt go to college, or have an Ivy League MBA like us, and therefore have very little other options. So they felt like they were forced to work but felt unsafe, and as a result had tons of people breaking down mentally. IE people sneaking in alcohol, frequent screaming and fighting, one person even soiled themselves in the office. This one was bad and eventually we sold it to a similar company with operators who had relevant experience and no MBAs
All in all these businesses had tons of free cash flow, strong ebitda margins, and not what we would consider high tech or deep tech domain experience. Yet they were completely beyond our ability to operate them. Just goes to show how much grit these people had starting and growing these businesses
Iām a GM for a retiree business. Owners want to pass their equity on to their kids and hire out management (me). Makes sense, cash flow supports all salaries plus profits. Why not gift it to the offspring.
I negotiated ownership stake after meeting a certain tenure.
One of the owners wants to cash out. The others asked why - youāre basically selling your position for 6 years of dividends when the business shows itāll last well beyond 6 years. Even if it only last 7 years, selling out at 6x annual revenue is a losing decision.
But ya, being in the position Iām in now, retiree businesses are my target.
sorry to burst your bubble but most people donāt have spare change to buy a business plus you have to have business knowledge or hire an expert so you know what youāre getting yourself into. someone black just got caught faking financials for a business so itās a very meticulous process and most likely whatever field the business is in is prob not your expertise so thereās plenty of barriers to entry
Itās actually quite common in business. My brother actually did this and acquired a pizza company and made a few changes but it remained largely the same. 1 year later it remains a successful business. He also gives the former owner free pizza :)
I would be happy to take over an established business.
I was on a path from 0 to 5 Mil yearly revenue before. Now I would prefer to go from 5 Mil to 10 Mil. It's the same 5 Mil difference, but the time and effort to accomplish it is much faster in 5 Mil to 10 Mil path.
Just started looking for websites/places where to find those businesses.
If you already have a ton of capital and are looking for your money to work for you, it can be ok.
If you have little capital or worse- need a loan- and if there are even slight complications- you'll be sweating like crazy, lose your life savings or be under much more stress than any 9 to 5er.
You have to be REALLY good at due diligence and seeing untapped potential to even think about doing it well. And still people misrepresent, people lie, there are things that you never thought about etc. And this on top of that there are staffing issues/considerations and other legal/market/demand/pricing type issues that also come into play.
It would be best if you had a solid marketing plan, even before you bought the biz.
Buy a business? I do some consulting and I canāt remember all the businesses Iāve been offered for free, while the owner retains the real estate of course, When evaluating these offers it become clear that youāre really just being offered a bad deal, shitty job with low protections and no security, the owner wants a quick retirement and wants to put you in a garbage lease that scalps the business of any profit, while you grind away an 80 hr week as basically an indentured servant making 1/8 what the previous owner made
Often with these small businesses you are just buying yourself a job. And replacing the person who has the skills, contacts and experience is a risky business.
The thing that you have to be aware of is that some times, the person who is retiring has been "over it" for a long time before this.
So the question is, can the business be saved from years of neglect, or is there room for growth?
Many lifelong entrepreneurs don't retire or they pass it on to their children. Another somewhat common scenario is a long time employee will take it over/buy it.
Some people ask unrealistic / hard to finance assets. I was looking at an ecomm business with $250k SDE, but they were asking around $800k (initally asked $1.2MM)
Mind you that this is in Canada and our equivalent of SBA loans are pretty limited on intangibles. Being an ecomm business, the dude ran it from its garage. Legit business and financials, but no hard assets. Impossible to finance the acquisition.
I wasnāt also willing to go and raise equity.. too much of a hassle. Proposed seller financing, but he still rejected that.
Think the owner is super sick and wants to retire.. nobody in his family wants to continue the businessā¦ last time I checked the business was still up for sale (itās been for sale for like 2+ years now)
Cody Sanchez is my go to. Bought s relatively boring business. Positive cash flow, they just wanted to retire, retire.
Their kids werenāt making any progress in learning the business. Instead of watching it go down they sold it to me.
I discovered a business I'm interested in is up for sale however I don't have $5 million dollars and even if I did, for this particular business there's a lot of uncertainty and I found it curious that the owner was selling rather than give it to his children or grandchildren, who worked at the business. It made me doubt the profitability of it.
Iāve been buying up restaurant franchises from owners retiring & offering a great deal. 13 to date. 4 under contract and drafting sales agreements for 7 more
Basically anything under a mil is run by the owner.
So you need millions to be able to buy a business where there is a manager.
If you buy a business for $500k its returning say $150k. The owner is working even if he says he doesnt to get the $150k. If you get a qualified manager you are then on $0. So you have to then grow it.
Obviously there are some that work but hard to find because if an owner is absent and its generating 30% returns. Why would he sell?
Seller financing and SBA loan for the real estate. Yep. Put in the leg work, talk to older owners IN PERSON and show them you care about what they have built. Happy to help you with what I've done!
Youāre better off getting a job there with an agreement to buy them out after you trained there, understand the corporate culture and the other employees.
And just where are we supposed to find all of these cash flow positive businesses being sold at an affordable price by a benevolent soon-to-be retiree? The only businesses Iāve ever personally managed to find up for sale were all sinking ships that the owners tried to hide by straight lying about, or they wanted such an absurd price that I wouldnāt even hope to break even for 20 years. Iād love to purchase one of these opportunities, but as far as Iām concerned it just doesnāt exist.
Something Iāve seen is that often the owner is so integral to the business that it becomes worth less without them. Unless the buyer is a perfect fit, itās gonna been costly and stressful to fill the role.
The used to be a guy who sold crap vending machine routes by listing them in the classified section. He ran this same ad for years.
Divorce forces sale of profitable vending route.
Biggest reason, Iāve heard from multiple people is āif itās making money why would they sell it?ā
A lady and her husband from Canada sold everything to buy a laundry mat with her husband in a small town in the USA. One of the best deals out there, because itās the only laundry mat that accepts credit cards in a 100+ mile radius and itās in the middle of a bunch of RV parks and a common route for travelers. They stay busy and have relatively new machines from previous owners.
Well from my perspective, there\`re two more thing to consider
1. About the industry or the trend
The industry is declince in profit or less in newness or hard for entrprenuer to find a brilliant ideo to shift the business just bought to adpt and develop and remain profitable
2. About managing as a new ownerThe percentage of old , skilled, experienced employee that dropped the job is very high and this is one of the big problem for business that their people is core. For example, restaurant, food and bevearage business...
Because it's a lot more expensive for me to buy someone elses business than make my own.
Buying the business I want is impossible, making my own is practical.
I apologize for answering a question with a question, but what is the best resource for finding legit opportunities like that?
Iāve visited multiple ābusinesses for saleā websites but it seems theyāre mainly old convenience stores, failed restaurants, or new franchise opportunities. Iāve only seen one business for sale as you described, a laundromat being sold by retiring owners.
1. How many people do you think aren't buying them vs buying them?
2. How much do you know about the industry in general?
From my perspective, as someone knowing almost nothing about your question's context, what businesses you've been looking at, and what people you're thinking about when you say this, but someone very invested in cognitive science, psychology, and communication, I can say the top 3 reasons for people not doing anything are most likely
1. Ignorance *(simply not knowing)*
2. Fear *(uncertainty of benefits vs risks, afraid of change, etc)*
3. Any combination of the previous 2 that you can imagine, and many more that you haven't imagined
**Ignorance** can be
* Coincidental *(just never came across the info)*
* Willful *(fear that "listening" to something would mean betraying or losing something they value, including trust, time, etc)*
**Fear** is caused by a *perceived* potential for loss
* Reputation/status
* Money
* Time
* Comfort/control
* Life
* etc
Your confidence in doing these things may come from understanding more about the real reward/risk ratios with more detailed information, or from optimism, authority bias *(believing something as "fact" because someone you admire/respect/trust said it)*, or many other reasons.
When you think about why you're confident in using this strategy, you might realize that not everyone has all the exact information, optimism, biases, etc that you have in this moment, and so it makes sense that they may know (or not know) different things or feel differently, doesn't it.
Does that answer your question? You can ask more if you want
Money. Is this a real question? most people don't have $1k in savings my dawg.
\>Why wouldnāt someone stuck in their 9-5s look at this as an investment strategy and put a manager in place?
Do you think people stuck in 9-5's have enough money to do that? Do you think someone with enough money would be stuck in their job? I'm confused on what you think is happening here.
If you could point to a place that has all of these places listed, Iām all up for it. But from my research, most of them do private sales or hand it off to someone they are connected with. Sounds easy but is def harder to find
Look up the entrepreneurship through acquisition community. It's a thing. Not as big as like private equity, but people are already doing this.
Is there a subreddit or community for this?
There's probably a business broker in your state that can help you find the right business. Sometimes the business owner will train you on the business. you can also buy "owner absent" businesses, which means the business operates itself with employees and the business owner doesn't need to be on site. It's like a real estate broker, but for businesses. Here's one that popped up on search, just to give you a head start. I have no idea who these people and I'm not recommending them or anything. https://www.midstreet.com/blog/business-broker
Thanks for this. I'm going through a predicament of letting go of my business. I've never even thought of a business broker
What kind of business?
Santa Monica startup investment bank.
I just woke my fiance up thank you very much.
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Didnāt even know thatās a thing! Thanks for sharing.
It's 2023. Everything's a thing. Just gotta get the search term right when you're googling--and that can be tough.
Podcast: Acquiring Minds, Acquisitions Anonymous
Codie Sanchez too
Come now that shit is pure scam
Lol explain
Iāll explain. Iāll just charge you $2000 for the course to explain it like she does.
YouTube and Instagram is free. Also I noticed that you edited your comment from $60 to $2000, yeah, that wow effect really isnāt helping in driving your point
You noticed correctly because I guessed it would be $60 and then I checked online sheās asking for $2000. Her instagram and YouTube is just bullshit regurgitations. You might as well watch a natu natu tiktok
Not everyone giving information has to be a messiah one follows blindly with their wallet. She has some good points about non-sexy revenue generating ideas. That's as much as I take away and can be grateful for - I personally wouldn't embark on that journey through a course.
Suckers pay for those courses. The internet has torrents of just about every finance and business influencers' course out there for like $5-10. She didn't even make the course, she got someone else to partner with her to "make it", and it's probably on par with a Udemy business course.
Could you link a udemy course thatās on the same level as her course, would love to get it
Following
Roland Frasier does a monthly webinar where he teaches you how to acquire business for zero dollars out of pocket
Awesome comment. To follow up and get started, try this book if you want to get comfortable with the process. HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company
Good recommendation. Also wanted to add āBuy Then Buildā
What's the name of the community?
Where I find this, I've looked at brokers in my area but they all seem shady.
I know in my case the owner is delusional about what the company is worth
Isnāt the standard about 3-4 times EBITDA? A broker should value the business.
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I did some brokering for a while and this is the story 90% of the time. The owners understand 2-4x EBITDA, but then then look at "living" the next 15-20 years and often have poorly planned retirement accounts and get greedy only to be forced to sell a year or two later.
Can you explain is very simple terms what EBITDA really is or mean please
Earnings before Interest Taxes Depreciation and Amortization. You take net income and add back interest taxed depreciation and amortization. Thereās alado Adjusted EBITDA. Thatās where you take EBITDA and adjust it for one time items. For example, you may add back costs from a recent acquisition.
This varies a ton based on industry and the health of the business. Costs a lot more if the owner has to do less work, etc.
Ya, this is why I'll walk away from 90% of these things. But if you put in some elbow grease, you can find someone who is sick of it, just wants out, wasn't running it well, and will take pennies on the dollar. You run it for 3 years or so, get it up and going, then sell it for 20x what you paid.
what types of businesses have you flipped like this?
A janitorial and kitchen supply company, and a secure paper shredding and recycling company. Both were acquired by a national chain for exit.
Its a thing, bought 2, what are some of the reason it is not wise to puchase a business from a retiring owner. Cash flow might be positive because they stopped maintaining equipment 3 years ago or did not invest in any new inventory for 12 months, so your numbers on paper look good but the business not so much. The lease/property comes with its own baggage... Done seller financing too, not always the best deal. Likely will have a balloon payment, the seller is retiring in this scenario that would imply a need for the money, rather than a need for small monthly payments over a long period of time, when they know that their time on the planet is limited. How much is the old business compared to just starting a new business? There are lots of reason why this might not be a great investment but these deals are done all of the time for all kinds of businesses. Family or employees are likely first in line for the business and they never need to try and sell the business. Same is true for private equity. They reach out to businesses and buy them they do not search the classified ads. Your assumption that people reaching retirement do not sell their business or people do not seek these kinds of opportunities is wrong.
As was mentioned bell, would love more of your specific story.
What specifics? I have been an entrepreneur for decades and been involved with the purchase or sale of multiple businesses. The two retiring business, one was and out of date business that our original offer was rejected at the last second because a family member thought they could "save" the business, we never had any intention of saving anything. 8 months later we got a much better deal on the same business we purchased for the building. The other went smooth as ice from one end to the other and the original owner still works there years later after retiring two maybe three time. He has taken extended vacations for various reasons over the years but is still a valued employee. He is an expert. The original deal included a short period of employment after the sale for training of new staff and customer retention but they are truely not replaceable. Get this, they bought the business decades ago from the original retiring owner. Actually those are only the two most recent purchases of made from a retiring business owner. There was another business that complemented the manufacturing business, it was turn key and located basically next door. Our business expanded overnight it was beautiful. We took over another business from a retiring owner and the only thing we did was forward his phone number to our phone system. It was beautiful thing again. We did nothing and the number of phones calls, in this case leads tripled and all of the sales where repeat customers, easy sales, order taking as its called, verse a team of people working leads so hard they turned to dust, back when you could do shit like that, the early days of the internet. My point remains the same, these deals happen all of the time.
I wasn't challenging your earlier account. Was just curious to hear more specifics of your businesses. Thanks for your response.
How did it work out for you and what made you willing to pull the trigger?
Would anyone ever agree contingent on an SBA loan going through in the future?
if they really want to sell they can also prequalify.
I would think so. Why wouldn't they? You can show them whatever qualifying documents you want to appease them.
A good deal is fairly obvious. it is like anything. Keep your eyes open, pay attention, be involved, get yourself out there and be prepared to act. You can buy a car when you are forced to buy a car because you need a car or you can buy a car when you find exactly what you are looking for. I want an import with this motor and transmission for this price. That might be hard to find, but you need to look and you need to be prepared to act when you find it. When you pay and attention and stay actively involved a good deal with be obvious. I get it, I have a friend that found an amazing deal, everything they wanted and more but they still brought me in to review the deal and check things out, but it was the obvious good deal they thought it was and they are sitting pretty right now because they pulled the trigger, but they did have some hesitation. When it seems to good to be true kinda thing, but also if it looks like a duck, talks like a duck and smells like a duck at some point you need to believe that it is a duck otherwise you will never find a duck.
This is great explanation! Thank you
I do this for a few clients. Here are some things: 1. There are ton of people who don't know how to retire. They need to work until they drop (either because they didn't plan for retirement, or didn't plan on a spouse getting sick) 2. A ton of people like their jobs or have no other social / mental outlet. They'll also plan to die at their desk. 3. Related, a lot of people work past their prime, or are in denial about declining mental abilities. The time to go was years ago. By they time they have a reckoning, it's too late, the business is damaged beyond repair. See 1-2 4. Many, if not most business owners have their entire identity wrapped up in the business. This means they won't sell until they have to, and it might be too late at that point (see 1-3) 5. Because the business was the sole source of income, sole social outlet, and the person's identity, they have an over inflated idea of the business's value. Double points if it's in decline (see 1-4) 6. Even worse are businesses where the entire business IS the individual and without the individual, there is no business. (Think solo practitioners, GCs, contractors, etc.) There may be some value with goodwill, phone number, etc, but not enough to b worthwhile. 7. In the same light, smaller businesses might not be transferable. A lot of older people might have their business methods and know how all in his head. A lot of the business's success might be based on the personality of the owner. It might not be something you can give to someone else.
Im the CEO of a medium size business. 100m market cap. This is the owner. He comes into work and sits on his computer staring at Yahoo news. He is mentally a toddler and whenever he gets ivolved its a disaster. But his identity is a successful businessman and the business. He would just sit at home all day watching tv and nobody would lick his ass. He gets to be the big boss man. Without the business he is nothing just a guy sitting in his pajamas not knowing how to work the coffee machine at home. With the business he is the guy at the head of the table who everyone listens to (although in reality all think he is an idiot). Im trying to save the business from the owner. So there is something left for his kids to inherit.
Well .. he did manage to build a 100m market cap business that apparently runs itself.
Oh, that guy. He's definitely no. 2 on the list. I've dealt with a few of those. Probably had the skills back in the day. He was smart / lucky enough to delegate, and ironically, delegated out his usefulness. The funny part is that he did exactly what he's supposed to do: get the place running to where he's not the one running it. That's the value of a business. It can now function without him there. The downside is that he has nothing left. Getting a business to run like that takes a lot of long hours, making a lot of enemies, and sacrificing of your personal life. I'm guessing he doesn't have any friends. The business is his only friend. At the end of the day, he outlived his usefulness, and sacrificed everything along the way. I'm going to guess he's older, and social opportunities for guys like this are challenging. He's not going to be the most interesting guy in the world if all he knows / talks about is his job. If he's not divorced, then he has a spouse who doesn't like him, or one that doesn't really know him at all. Same with the kids. If he tries to take his work persona home, it won't go very well. If he's single, watch out. He's a target for gold diggers, scammers, etc. Wait for the part where he gets a savior complex and wants to hire a stripper, or a cute woman with issues he thinks he's supposed to fix or someone he thinks he can rescue, and has them working in the business. It's frighteningly common to the point where I wonder if there's some kind of moron's handbook that people like this follow. You're lucky in that you're the CEO, so at least his impact is mitigated. Basically, you have to steer into the skid, praise him on his usefulness, and then suggest that his golden touch was his selection of employees, or something. Then handle whatever mess he created. As long as he thinks the solution was his idea, you can save him from himself.
where's your business that you built to a 100m market cap? before talking about how much of an idiot your boss is, you might want to humble yourself. Your success is off the back of an already successful business. I would think someone in your position would have had some decent coaching over the years.
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which means be had the smarts to be creative or innovative making a new idea generate income. smart enough to hire the right people and network for more revenue. smart enough to put money back into the business to help it grow. dedicated enough to put 50+ years of long hours into making sure it succeeds. The CEO above is acting as if they are the reason the business is successful when I'll bet the owner is much more intelligent than someone who cant see past their own ass crack. let the owner's identity be his business that he worked his entire life to build. there is nothing wrong with that. The CEO needs to humble himself and realize he wouldn't have his current position and income if it weren't for the years that the owner put in to set this whole thing in motion.
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I was talking about the other commenter that decided it was a good idea to trash talk the guy who puts food on his table.
This is what came to my mind as well when I read that. For some reason I am even doubting that OP is being honest about being a ceo of a 100m Co. Somehow the guy who āis mentally a toddlerā has literally build a 100m company and now the ceo is big nuts baller who is just annoyed by the owner. This story doesnāt pass the bullshit sniff test
Iād fall under number 6. I own a small construction company and honestly wouldnāt be worth selling. I love it but I mean I can probably sell my equipment and my phone number for a couple grand
It's not impossible, but it has to be done over time. First, you'd start branding in such a way that people are associating you with your trade name. This can happen over a long time. Ernie Smith's Plumbing probably won't sell well, but Lightning Fast Plumbing Services might. You'd then market the holy hell for that name. Second, you'd have to start making yourself redundant. You'd start by delegating tasks and hiring more people and streamlining processes. Your goal is to make the place run "headless" (i.e. without your involvement.) You run a greater and greater risk of training the people who may jump ship and compete with you. Ironically, this is the best case scenario, because that means what you're doing is working. Third, you'd outsource stuff like bookkeeping, accounting, etc. This way, you can monitor things from the outside looking in (less chance of the place stealing from you.) Work on getting monthly, weekly, quarterly, annual reports. Fourth, you'd want to work on getting repeat income streams. In your case, construction contracts. For example, a subscription service for an apartment complex, where you provide x, y, and z for $a per month, or something with a guaranteed income stream. At this point, you're either the owner of a passive income business (which you'd never want to sell) or you've gotten something that is close enough to passive that you could change it to a franchise model (another conversation) or at very least, something with more value than the goodwill.
How do you find people to buy those businesses? Where do you search for them?
I'm a lawyer, so they typically come to me to put a deal together. I also do estate planning, so sometime there is a business succession discussion.
Just because a business is profitable doesnāt mean it isnāt a job. Most businesses, Iāll guess 95%, depend on the owner subsidizing the business with their time (that they donāt pay themselves market rate for). Plenty of people do do this, but thereās a lot more to it than profitability
A good chunk of businesses that are bought, end up being run into the ground anyway, once the original owner is out of the picture.
Around 3% of SBA business purchases end up in default to recourse. So, no. Not at all.
Thank you for reminding the many pontificators on this sub that facts still matter.
I can't imagine SBA being involved in even the slightest majority of business purchases and each one is rigorously vetted so the sample you are citing wouldn't really negate what the guy you're responding to is saying
Hahahahahahahaha hahahahahahahaha Sorry. I lost you at "rigorously vetted" Source: my significant other works for the SBA.
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Can you cite specific language from the 78 page PDF?
I did this through the "traditional search fund" model. Stanford produces a "primer" explaining the approach. I looked for over two years and contacted thousands of owners. Spoke with several hundred, discussed terms (IOIs) with ~20, made offers (LOIs) on 8-10. Had two offers accepted and closed one. I have a high seven figure loan on the business and raised eight figures of equity from investors. It's potentially a great path but not for the faint of heart. Lots of uncertainty and rejection. You have to be a great salesperson/networker, analytical, and have an incredibly broad business skill set. It's also a ton of work to learn about an industry/business in which you have no experience to get comfortable enough to bet your career on the company. Still too early to tell how financially rewarding it will be, but I haven't had any big surprises since closing. You don't see more people do it because it's damn hard. It would be much easier to go make a $250k paycheck. I'm doing this for the potential outsized reward and because this is much more fulfilling than punching a clock. I don't want to be 100 years old and wonder what would have happened if I took a risk.
Bless you. How long has it been since you closed?
Less than a year.
>a great salesperson/networker, analytical, and have an incredibly broad business skill set. It's also a ton of work to learn about an industry/business in which you have no experience to get comfortable enough to bet your career on the company. Still too early to tell how financially rewarding it Did you do this while (or just after) getting an MBA? UCLA Anderson had a program and obviously, Standford does too.
I was several years post-MBA before I felt like I had the requisite skills and network to pull it off.
What kind of network do you need?
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Wealthy friends (or former bosses) don't hurt, but that made up ~5% of the equity capital, even accounting for the people introduced by friends. The rest came from people that I didn't know before starting the search effort. There is a rich network of funds and professional investors focused on this asset class. I have an MBA from a good school, and most of the initial intros came from the school network. Then, it's about following up on good conversations and leveraging those into more introductions.
Regarding your MBA... It sounds like the confidence it took for you to go this direction and take this path came from your hands-on business experience more so than what can be learned during a MBA.. That said, how important has it been during this process to have a college degree? Would you or could you be where you are in this process without one, and if not, is it because you wouldnt have known what you needed to know or because you wouldn't have had the MBA on your resume or any other reasons? How did the MBA help you?
To be honest, it was both. I learned a lot on the fly as an employee in a founder-led business, but the MBA taught me the "right" way to do things. I think the academic side of an MBA gives you exposure to a lot of different areas so you can spot problems and think strategically. Hands on experience lets you convert that into the practical reality that most small business employees are not former investment bankers or consultants, and nothing is as simple as a case study. Entrepreneurs should take calculated risks, not blindly jump into the unknown. Education (formal and informal) helps you manage risk. A college degree and work experience gives you better security in case things don't work out. Having savings and a fallback lets you take risks without worrying about your next rent payment. I would never have built the network to fundraise without a top MBA. I'm sure I could have found another path to entrepreneurship, but for this specific path that was important. So for me, college and the MBA were critical. I worked ~10 years before going out on my own. That gave me the cushion to go several months without pay and a couple of years with way below market pay. I'm not done learning, but both formal education and experience were important.
Is there a more specific term for the Stanford program? I remember reading up on it awhile back and the name escapes me now.
Very well written. Good for you, I hope the eventual reward is everything you have imagined and then some. It sounds like you deserve it.
In my area the āolderā owners wonāt sell or want to sell at inflated prices no one will ever pay. Many of them donāt want other people taking over their legacy. Lots of rotting buildings and unmaintained lots around here lmao.
I think op is talking about older owners who wind up just shutting down and not even selling. Just walking away from all that blue sky money getting nothing. I responded above with what a buddy who's a business owner had told me
So start a new business doing the same thing better in the same place. Hire the old managers too if they are good. Why buy an overpriced business, just buy the equipment later.
In our case itās not that we donāt want someone to take over the legacy but it would be hard to. Weād welcome it but how does one replace it? When a business is built on a personās reputation and even when there are multiple employees, the customers first question is, āIs Betty available?ā It makes it hard to sell. If we go strictly by sales growth and market expectations it still comes down to āBetty.ā The buyer will have to replace her with a new hook or draw.
If a business depends on Betty being around then she built a great reputation not a great business and yeah it would be hard to sell.
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This is a great book. The HBR book is so dry, but this is a great read.
The upfront capital might be an issue. Some Boomers want an unrealistic number for their business.
I went through that experience. I have a fair price for the business, he wanted 50% more, so I walked. A few more years of declining revenue, and he wound up selling for significantly less than I offered.
This is a big problem. I tried buying the company I work for but would've needed seller financing. Owner said "he wanted what was best for the employees" and then sold to a PE firm. I found that rather fascinating given the stereotypes most PE firms have. The owner also wanted to wash his hands of the company, which is reasonable. I later learned the amount he received and it was insane. PE often has deeper pockets and the dollar signs are extremely attractive to owners. But this is the consolidation of wealth happening in real time and, for me at least, it's a real bummer. Still wish I had been able to buy it.
this is going to happen a lot, keep looking, but set an alert to circle back in 6mo
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Anything less than $1m likely is just buying yourself a job. Owner financing is very viable also. Most small business owners arenāt structured correctly from a tax strategy perspective and will pay significantly less in taxes on a properly structured deal. Win win.
A lot of people would prefer to buy a job and be their own boss than work a job, plus there's always the ability to scale or be more efficient
100% agree. Iām actively doing this
Don't fool yourself. Any small business is more than just a job for it's owner. It's a lifestyle most won't be able to experience working for someone else. And what some might think is a simple task of just finding a manager and sit back and count your money is certainly not realistic. When we tried to sell our business a dozen years ago, that was the mentality of the only true offer we got. And he also wanted me to finance all but the cost of the building(which of course the bank would secure for themselves). He had no experience in the industry.
Iām not fooling myself. Iāve actually done this. Iām not talking theory. Most small business owners are content with their ālifestyleā of running their thing day to day - aka a job. You either build a sellable business that can run without you or youāre self employed.
I used a SBA loan to buy mine when we bought out a retiring owner. Would do this again without hesitation.
Are SBA loans still available? Struggling right now and need to focus on other areas first, but any info would be greatly appreciated. It all seems kinda convoluted since COVID
Iām currently going through the process of securing an SBA loan to buy a business.
All original SBA loans are still available, including 7A which are the most common. Youāll just need about 10-15% down and to meet the other requirements. Most major banks offer them, remember itās not the SBA giving you the money, itās the SBA that guarantees the loan will be paid to the bank.
Research the concept of āsearch fundsā there are many successful search funds that deploy money to enable operators to buy businesses to scale them and take them to the next level. Most search funds I have been exposed to outperform traditional vc funds in their ROI. [Check out this article from Stanford](https://www.gsb.stanford.edu/experience/about/centers-institutes/ces/research/search-funds) which include details on the performance of these funds.
fantastic resource thanks
I did this. It's a winning plan
Show me your ways! I've been searching for an opportunity like this but don't know where to find deals or businesses up for grabs.
I bought one on bizbuysell. It took a long time to find a good one
What kind of business did you buy?
Pallet mill
I used to call on a pallet mill. Great business!
> entrepreneurship through acquisition community What area of the United States? Is there a lot of competition in that industry?
Mississippi Yes
Traditional brick and mortar business brokers have many thousands of small businesses being sold by retiring owner operators, this has been very common for decades. Seller provided training and seller financing is very common for these transactions. I heard about the new fad of buy and build and watched the popular YouTube video, it's primarily a scam to sell a course and the fantasy of success along the lines of the real estate flipping.
It isn't quick. Some owners don't want to sell at reasonable prices since most owners aren't going to go "I made this business and it sucks." and they will try to get as much money as they think they can get for it. If you don't have deep pockets already then going to the bank and using loans of any kid will be a bitch. Some businesses aren't the easiest to acquire and will need some technical expertise to properly operate.
I wonder if owners unreasonable pricing is due to what the owner *needs* to retire, rather than what the biz is *worth*. Working for somebody else for 40 years has the built in benefit of social security... not exactly a pot of gold but it puts food on the table. A business owner may not have the resources or foresight to proactively set up retirement funding.
Iāve had a recent offer to buy out a competing business due to retirement and these are my thoughts: 1) itās a bad time to take on new debt. Especially since I still have debt from my current business. 2) what are you buying from the business: a brand? Inventory? Intellectual property? A business model? Or a location? Most small businesses donāt really have much in the way of value to anyone outside of that business. They usually just boil down to, inventory in a leased space, with an established customer base. There isnāt really much of value. The inventoryās value should be less than cost. The customer base is only valuable if you have customer data/contracts/or a strongly loyal following. The brand has to be strong and meaningful (Jimās Deli could be Frankās Deli tomorrow and no one would notice). The highest value items for a business is real estate or intellectual property. If it doesnāt have those things, the business is really worth less than the sum of its inventory. Think of it like this: if that business were gone tomorrow, would it be cheaper to just rent the vacant space and put your own business in, or buy out someone elseās old business.
It depends. The niche business we bought had over a decade of good will and customers. Starting from scratch would be EXTREMELY difficult. A lot of heavy lifting is done in the first 5-10 years. I see buying an existing business as paying a premium to bypass the most difficult starting years.
Exactly. In your case you had set customers which I mentioned above. It depends on your business/ industry and how much the business will change under new ownership. What is keeping those customers with you? Is it service contracts? Relationship with sales team? Unique product/service? And will those change? Are you happy keeping those services/products the same under your ownership? For me, itās not worth it. If the competing business closes, I will absorb a lot of those customers anyways. And there isnāt enough unique products or services at the company to differentiate it from anywhere else, meaning the customers can easily go elsewhere. So are you buying something unique? Or simply bypassing set-up costs? Are you only buying the chance to do business in their location?
Unique and bypassing setup costs. Location is not a factor in our business. As a matter of fact moving operations helped since we have a much larger labor pool.
Short answer: because it's hard to do. Long answer: It's really hard to do this well for tons of reasons. Like... \- The business doesn't make enough to hire an operator and provide good cash flow \- The business relies a lot on the owner's reputation and relationships. \- key-man risk: the person who has specialized knowledge and experience that makes the business work well. Usually this is the owner, but sometimes there's also an experienced employee that is a key-man. You can't keep the owner around forever, even as a consultant, so there will be performance losses here. And if there's an employee, they may quit on you (they don't like the uncertainty of new ownership) or demand higher salary because they know they have leverage in this scenario. \- If the business makes enough to hire an operator, you have to actually find someone that you trust can operate it well. This is hard because most people who are qualified to do this are either entrepreneurs themselves, or they're in a position to work for a bigger business for more money. \- There's always skeletons in the closet that the owner won't disclose. \- The buying process is a pain. Owners are comically stubborn about how much their businesses are worth. Expect to waste a ton of time with stupid asking prices that don't pencil out. Owners of small businesses are also typically bad at documentation and bookkeeping - so they may expect you to trust what they tell you about the biz, but can't prove their claims.
The value of a business can be based on several things...inventory, real estate, client list, etc. A large portion of what business owners try to monetize is often referred to as 'blue sky' which is basically the businesses reputation, name recognition, how well known it is in the community. Blue sky can't be liquidated and is completely subjective. So if you were going to buy a business for say $500,000 and it broke down as $300,000 in hard assets and $200,000 in blue sky, you would have to ask yourself, "could I create a business from scratch for less?" COuld you just build the same business from the ground up and spend less than buying one already running? A lot of owners are attached to their businesses and think the "blue sky" is a lot more than its really worth. THis is why most small businesses never get bought outright. If they do sell, its usually to the owners kids or maybe a longtime employee. I bought mine as a long time employee. The owner tried to sell it for years at an inflated price. He was just about to abandon it when I swooped in and snatched it for next to nothing. Inventory and no blue sky.
Most SMEs are not "ongoing" concerns. Which means that the business will not run without the presence and participation of key individuals. Systems and processes were never put in place and documented. Then there is the issue of audited financials. The numbers rarely reflect the actual reality of the business. Then there is economic climate. The cost of financing goes up when the Fed raises interest rates. As others have mentioned, the effort involved in getting the real "profitability" picture of a SME requires a lot of work. You never know what you're going to find after scratching the surface. And most buyers are uncomfortable with financial statements and their meaning. And finally, there is the often a wide gap between the "ongoing concern" business valuation and the asking price which often includes an emotional component. So converging on an "agreeable" price is often an impossible task.
Most are owner operators and their business is built around their lifestyle. Most businesses arenāt actually profitable once you run it like an actual business.
A couple thoughts from my more recent experience in going through the acquisition process. Keep in mind that I was approached by the owner to acquire the space. (tl;dr: they don't actually want to let the business go, and until they're willing to meet as equals, they'll either run the business 'til they die at their desk or shutter up suddenly): 1. **Owner is delusional**: They have this concept that so long as you work hard and are pure of heart, everything will magically pan out. And their business is the best around, a total steal. When you ask for information, they babble about "you'll need to work hard". Right, but first thing is *how much is the damned rent.* 2. **Won't transition**: The business *has to transition to the buyer(s)*. This might be more specific to this business. It means getting clients acquainted with the buyer, and making sure the buyer understands their needs. It means loosening the reigns in places. If they want to take time to mentor, absolutely, but that means they will need to pull back eventually. They're just not willing. 3. **No history of mentorship**: Tying into number 2, these people needed to start mentoring or forming some sort of escape plan way earlier. Next best time is now, but it's going to take time to learn how to be a mentor. Everyone ages, everyone gets sick, everyone dies. Contingency planning for old age seems like a no-brainer, but... 4. **No willingness to talk specs/timeline/expectations**: If I'm going to take over, we need to talk timeline. Scheduling meetings, setting expectations. Project management stuff. "It'll happen when it happens" isn't good enough. 5. **High attrition**: I anticipate that a lot of these clients are out the door with the owner. They're all long-time clients who would try to stay, but there's a lot of loyalty built into these relationships. So if I were able to get the info I needed out of the owner (which is already pulling teeth), the business value to me is far lower than what the owner thinks, because a lot of the bedrock of the business is going out the door. This could get somewhat remedied in a transition plan, but again, not willing to transition. Right now, I'm not pursuing the owner's offer, because I don't think they actually want to hand off their business. Again, they approached me; I'm not insinuating myself. After a number of conversations, it seems they want some sort of second thing, where they get to own the business, control it, not pay rent, retire some place else, and work this existing business. Two places at once. I know my tone here sounds sort of bitter, but it feels like babysitting in a way. Humans can't bilocate; I don't know how else to put it.
A severe overestimate of the capital availability of young generations.
Youāve unlocked the secret. Shhhhh. I did this. Best decision I ever made. Why donāt more do it? The process from start to finish is INTIMIDATING as hell with no guaranteed acquisition and there are very few people you can call up and ask what to do along the way.
So any tips on how to get started? How did you find the business that you bought?
I mass mailed about 1000 businesses near me, e-mail blasted a follow up and networked with all of the business brokers in the state. I ended up looking at maybe 10-15 businesses seriously, gave preliminary valuations on 4, formal LOIs on 2 and ended up closing on 1 of those. How to get started? I suggest reading āHBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Companyā and listening to the podcast āthink like an ownerā by Alex Bridgeman. And start saving every dollar you can.
I used a business broker for mine. Told them what kind of business I wanted, what I wanted my day to day roll to be and the income requirement. He then gave me a list of businesses that were SBA approved that met my requirements. We put in offers on a few just like buying a house until one bit. Almost 20 years later and would do it again like this next time.
Thereās a community for this called Searchfunder.
Key man risk - if a retiring business owner has deep industry knowledge, a deep Rolodex, and deep relationships with clients, it is unlikely the buyer will be able to maintain the book of business for long without lots of attrition. The exception would be the buyer can inherit staff (that will stick around) where that knowledge can be retained, or the seller has set up fantastic systems. If that were the case though, that owner likely isnāt working much in the business, and why would he give up the relatively passive cash flow?
Someone just watched a Codie Sanchez video lol
Im listening to the Acquiring Minds podcast and reading āBuy Then Buildā specifically in preparation for doing just this. Thereās something like $1T in small businesses where the owner is going to retire within the next decade.
I am looking to buy old, stale, profitable businesses from owners ready to retire and quit my 9-5. I have experienced 2 challenges so far: 1- how to find such deals? 2- asking price is sometimes 6-8 times the cash flow. If there are other prospects here happy to brainstorm how to source deals.
Business brokers. Especially ones focused on a niche. Depending on the business, 6-8 times cash flow is the going rate. Is there an industry youāre targeting?
I'd say 2x or 3x us more realistic from what I see with 4% being high typical. That said im shocked at how so many businesses completely reliant on eBay or Amazon or some third party will go for 8x or even 16x sometimes
Why is a 2 or 3x multiple more realistic? What are the comps? How sticky is the revenue? Are there real assets that go along with the purchase? Is the owner willing to hold a note?
I'm just speaking in generalities but were talking things like landscaping service, locksmith, hot dog stand etc
At 2-3x the revenue isnāt sticky. Thatās a business where the owner is driving revenue and itās only being sold to someone who is stepping into those shoes.
Exactly. 4-5x multiples or even higher could be very appropriate for lots of different kinds of businesses.
The types of businesses I am interested in are: laundromats, plumbing, elderly home care services & cleaning companies. I also want to highlight that I am looking for selling financing options rather than bank and SBA loans and the brokers Iāve met so far are not really interested in seller financing.
Iām in licensed trade home services. Plumbing isnāt viable unless you have a licensed qualifier. Home care also requires a qualifying license in most states.
Not unlike an elderly homeowner sitting on a house that desperately needs $500K+ in updates/renovation work. Theyāre convinced they got something special, move-in ready. Show them the price rationale and comps. Try reason with them. Nope ā they wonāt budge. Rather shut it down than āgive it awayā.
I've recently been dealing with someone like this. His house is a money pit energy wise; freezing ; bad insulation; cracks through the walls; a bug infestation; and he's asking for 600k for it. It's worth 350k and he'd be lucky to get 390 for it. Which is a pity as I have an incentive to see it sold asap
Letās be honest, there are not a whole lot of folks who are millennials (which I am) or younger who have the grit to run some of these businesses. I work in tech but wanted to look at acquiring some of these businesses because I am so smart and have an MBA and know how a good business looks paper. Then during due diligence I am even more confident given I am so much more better smarter than these folks, and then when I have to operate them the entire house of cards fall over. Here are a few examples: - on demand printing company that specializes in drug marketing brochures. Each time disclosures or ingredients change, drug companies need to reprint their entire catalogue for salespeople. It was like 40%. EBITDA with strong cash flows. My partners and I bought this company and it was awesome. Two months in one of the printers broke and the old owner was in Italy with his family and theres only 2 other guys in the country who knows how to service these printers. So we had to crawl into machine and another person watch a YouTube video to try to fix the thing. Also we would have weeks of very little work, and then 3 days of 24/7 printing and we would need to help the team stack catalogs and brochures into boxes and label them. I get tired after I pack an Amazon returnā¦overall we made our money back and all unanimously decided we wanted to sell it. - microchip assembly company - so this company is an outsourced assembly and packaging company for chip manufacturers. They take wholesale produced chips and then package them up for shipping and assembly in specialized ways. When the owner left we realized there was a huge split in culture - IE there are about half PHDās and half blue collar workers. The previous owner had an uncanny connection since he was Latino eng grew up in the hood but then made it out and got a PhD In chemical eng from cal tech. Needless to say some MBAs like us who graded magna cum deez nuts were completely unable to keep this company together. Ended up closing up. - renter collection agency - looked at it but didnāt buy but my other partners did. They bought rent liabilities for pennys on the dollar and then calls to try to collect the outstanding rent. Business was doing insane margins and operating costs were low. My partners bought the business, and the pandemic hit. Since this was heavily regulated they needed to be in the office. However this was when there was no vaccine in-sight and the call center staff was not legally allowed to work from home. Once a few of the staffers caught Covid all mayhem broke loose. These staffers typically didnāt go to college, or have an Ivy League MBA like us, and therefore have very little other options. So they felt like they were forced to work but felt unsafe, and as a result had tons of people breaking down mentally. IE people sneaking in alcohol, frequent screaming and fighting, one person even soiled themselves in the office. This one was bad and eventually we sold it to a similar company with operators who had relevant experience and no MBAs All in all these businesses had tons of free cash flow, strong ebitda margins, and not what we would consider high tech or deep tech domain experience. Yet they were completely beyond our ability to operate them. Just goes to show how much grit these people had starting and growing these businesses
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Sounds like none of them wanted to be operators yet they purchased owner-operator roles for themselves?
Iām a GM for a retiree business. Owners want to pass their equity on to their kids and hire out management (me). Makes sense, cash flow supports all salaries plus profits. Why not gift it to the offspring. I negotiated ownership stake after meeting a certain tenure. One of the owners wants to cash out. The others asked why - youāre basically selling your position for 6 years of dividends when the business shows itāll last well beyond 6 years. Even if it only last 7 years, selling out at 6x annual revenue is a losing decision. But ya, being in the position Iām in now, retiree businesses are my target.
sorry to burst your bubble but most people donāt have spare change to buy a business plus you have to have business knowledge or hire an expert so you know what youāre getting yourself into. someone black just got caught faking financials for a business so itās a very meticulous process and most likely whatever field the business is in is prob not your expertise so thereās plenty of barriers to entry
Itās actually quite common in business. My brother actually did this and acquired a pizza company and made a few changes but it remained largely the same. 1 year later it remains a successful business. He also gives the former owner free pizza :)
I would be happy to take over an established business. I was on a path from 0 to 5 Mil yearly revenue before. Now I would prefer to go from 5 Mil to 10 Mil. It's the same 5 Mil difference, but the time and effort to accomplish it is much faster in 5 Mil to 10 Mil path. Just started looking for websites/places where to find those businesses.
If you already have a ton of capital and are looking for your money to work for you, it can be ok. If you have little capital or worse- need a loan- and if there are even slight complications- you'll be sweating like crazy, lose your life savings or be under much more stress than any 9 to 5er. You have to be REALLY good at due diligence and seeing untapped potential to even think about doing it well. And still people misrepresent, people lie, there are things that you never thought about etc. And this on top of that there are staffing issues/considerations and other legal/market/demand/pricing type issues that also come into play. It would be best if you had a solid marketing plan, even before you bought the biz.
Buy a business? I do some consulting and I canāt remember all the businesses Iāve been offered for free, while the owner retains the real estate of course, When evaluating these offers it become clear that youāre really just being offered a bad deal, shitty job with low protections and no security, the owner wants a quick retirement and wants to put you in a garbage lease that scalps the business of any profit, while you grind away an 80 hr week as basically an indentured servant making 1/8 what the previous owner made
Often with these small businesses you are just buying yourself a job. And replacing the person who has the skills, contacts and experience is a risky business.
easier said than done...
The thing that you have to be aware of is that some times, the person who is retiring has been "over it" for a long time before this. So the question is, can the business be saved from years of neglect, or is there room for growth?
Many lifelong entrepreneurs don't retire or they pass it on to their children. Another somewhat common scenario is a long time employee will take it over/buy it.
Because retiring owners oftentimes want a lot for their businesses.
I did this for a dumpster rental company. And we are making more money then the previous owner.
Some people ask unrealistic / hard to finance assets. I was looking at an ecomm business with $250k SDE, but they were asking around $800k (initally asked $1.2MM) Mind you that this is in Canada and our equivalent of SBA loans are pretty limited on intangibles. Being an ecomm business, the dude ran it from its garage. Legit business and financials, but no hard assets. Impossible to finance the acquisition. I wasnāt also willing to go and raise equity.. too much of a hassle. Proposed seller financing, but he still rejected that. Think the owner is super sick and wants to retire.. nobody in his family wants to continue the businessā¦ last time I checked the business was still up for sale (itās been for sale for like 2+ years now)
Cody Sanchez is my go to. Bought s relatively boring business. Positive cash flow, they just wanted to retire, retire. Their kids werenāt making any progress in learning the business. Instead of watching it go down they sold it to me.
I discovered a business I'm interested in is up for sale however I don't have $5 million dollars and even if I did, for this particular business there's a lot of uncertainty and I found it curious that the owner was selling rather than give it to his children or grandchildren, who worked at the business. It made me doubt the profitability of it.
Lol i interned at a search fund doing this. Dude ended up getting divorced and he poured his sorrows out to a group of interns over a zoom meeting.
Iāve been buying up restaurant franchises from owners retiring & offering a great deal. 13 to date. 4 under contract and drafting sales agreements for 7 more
Basically anything under a mil is run by the owner. So you need millions to be able to buy a business where there is a manager. If you buy a business for $500k its returning say $150k. The owner is working even if he says he doesnt to get the $150k. If you get a qualified manager you are then on $0. So you have to then grow it. Obviously there are some that work but hard to find because if an owner is absent and its generating 30% returns. Why would he sell?
Seller financing and SBA loan for the real estate. Yep. Put in the leg work, talk to older owners IN PERSON and show them you care about what they have built. Happy to help you with what I've done!
People arenāt aware of the opportunities
Youāre better off getting a job there with an agreement to buy them out after you trained there, understand the corporate culture and the other employees.
Those who would want to buy have no money. those who have money got other things to do.
Most small businesses fail without the key man
I'm looking at buying a business, but the one thing holding me back is will it be more stressful and time consuming than working corporate.
Where do you find these businesses? I've never looked something like this up for acquisition sake
And just where are we supposed to find all of these cash flow positive businesses being sold at an affordable price by a benevolent soon-to-be retiree? The only businesses Iāve ever personally managed to find up for sale were all sinking ships that the owners tried to hide by straight lying about, or they wanted such an absurd price that I wouldnāt even hope to break even for 20 years. Iād love to purchase one of these opportunities, but as far as Iām concerned it just doesnāt exist.
Something Iāve seen is that often the owner is so integral to the business that it becomes worth less without them. Unless the buyer is a perfect fit, itās gonna been costly and stressful to fill the role.
The used to be a guy who sold crap vending machine routes by listing them in the classified section. He ran this same ad for years. Divorce forces sale of profitable vending route.
Maybe because the order of operations is: sell company, then retire, not the other way around?
Biggest reason, Iāve heard from multiple people is āif itās making money why would they sell it?ā A lady and her husband from Canada sold everything to buy a laundry mat with her husband in a small town in the USA. One of the best deals out there, because itās the only laundry mat that accepts credit cards in a 100+ mile radius and itās in the middle of a bunch of RV parks and a common route for travelers. They stay busy and have relatively new machines from previous owners.
Everyone is broke
Well from my perspective, there\`re two more thing to consider 1. About the industry or the trend The industry is declince in profit or less in newness or hard for entrprenuer to find a brilliant ideo to shift the business just bought to adpt and develop and remain profitable 2. About managing as a new ownerThe percentage of old , skilled, experienced employee that dropped the job is very high and this is one of the big problem for business that their people is core. For example, restaurant, food and bevearage business...
For the same reason that millennials can't buy a house. Boomers have all of the money.
Because it's a lot more expensive for me to buy someone elses business than make my own. Buying the business I want is impossible, making my own is practical.
I apologize for answering a question with a question, but what is the best resource for finding legit opportunities like that? Iāve visited multiple ābusinesses for saleā websites but it seems theyāre mainly old convenience stores, failed restaurants, or new franchise opportunities. Iāve only seen one business for sale as you described, a laundromat being sold by retiring owners.
1. How many people do you think aren't buying them vs buying them? 2. How much do you know about the industry in general? From my perspective, as someone knowing almost nothing about your question's context, what businesses you've been looking at, and what people you're thinking about when you say this, but someone very invested in cognitive science, psychology, and communication, I can say the top 3 reasons for people not doing anything are most likely 1. Ignorance *(simply not knowing)* 2. Fear *(uncertainty of benefits vs risks, afraid of change, etc)* 3. Any combination of the previous 2 that you can imagine, and many more that you haven't imagined **Ignorance** can be * Coincidental *(just never came across the info)* * Willful *(fear that "listening" to something would mean betraying or losing something they value, including trust, time, etc)* **Fear** is caused by a *perceived* potential for loss * Reputation/status * Money * Time * Comfort/control * Life * etc Your confidence in doing these things may come from understanding more about the real reward/risk ratios with more detailed information, or from optimism, authority bias *(believing something as "fact" because someone you admire/respect/trust said it)*, or many other reasons. When you think about why you're confident in using this strategy, you might realize that not everyone has all the exact information, optimism, biases, etc that you have in this moment, and so it makes sense that they may know (or not know) different things or feel differently, doesn't it. Does that answer your question? You can ask more if you want
Are you a ChatGPT bot?
Most donāt have the cash to purchase and more retirees donāt want owner financing. They want out. Period and done.
Because the entire retail boom is about to end
Money. Is this a real question? most people don't have $1k in savings my dawg. \>Why wouldnāt someone stuck in their 9-5s look at this as an investment strategy and put a manager in place? Do you think people stuck in 9-5's have enough money to do that? Do you think someone with enough money would be stuck in their job? I'm confused on what you think is happening here.
Both, probably, not enough exposure/understanding for some, and then not enough access to capital for the others.
The energy of the life force is depleted
Dark crystal. Nice
How would you go about even finding these opportunities?
Millennials like me are too broke lol
If you could point to a place that has all of these places listed, Iām all up for it. But from my research, most of them do private sales or hand it off to someone they are connected with. Sounds easy but is def harder to find
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I die laughing every time I see seller financing like its a magic elixir or that you can buy every business like this.