Jack Mencini and Adam Sonnhalter cohosts of Dirty Secrets of Small Business and business coaches with Maximum Value Partners www.maximumvp.com discuss the details on how they advise their clients of how to go about buying a company. And, more importantly, buying a company the right way.
“So many people would like to buy a company and dream about it but they think it costs too much money,” said Adam. “It is amazing there are opportunities out there to buy a company. It often doesn’t mean writing a big check.”
Jack has purchased and turned around numerous companies and he knows a thing or two about the process to buy a company. But… How do you buy it right?
As you go through the process of looking for that company to buy, an important cleansing palate questions to ask yourself is: If someone just gave it to you, handed you this company; would you take it? Is this the company for you and your dreams?
“Well, no one is going to give you a company right out, but if you structure it correctly, you can get it for minimal money down. You need to turn over rocks and look for the deals. Most people don’t have realistic targets but once you do… it becomes fun,” said Jack.
There is a lot to really looking for that company and you need to buy it right. Both Jack and Adam strongly advise that you don’t put too much up front by tapping into every resource. Red flags should be going up if you are tapping every one of your resources and asking friends and family for money to buy this business.
It comes down to the philosophy of buying it right again. You need to focus not only on the price, but the terms you can negotiate. Terms could go over a period of time where the company is making profit. In this structure, you are able to meet the terms with very little stress on your part because you are using your skills and talents to make the business profitable.
It is also key to understand which is more important to the seller, price or terms? Do they need the money sooner or later. If they just want to step away from the day-to-day operations, they may be able to wait over time for the total payment of the company.
The first step is to have a non-binding letter of intent when you go into a conversation that you are serious about buying the company from the current business owner. This takes the company off the market and allows you, the interested party, to have the serious conversations and ask the questions from the current owner as part of your due diligence process. Don’t be afraid to ask the tough questions and engage people who own the companies.
To learn more about how to go about buying a company, finding companies to buy and more insights on small businesses access the February 27th podcast and all the Dirty Secrets of Small Business podcasts on iTunes or at http://maximumvp.com/dirty-secrets-small-business-radio-show-podcast/
Do you have any How Questions of your own to email to Jack and Adam? Do it by sending your questions to firstname.lastname@example.org or submit a question on their web site at http://maximumvp.com/how/.
If you have a success story or a question you would like to share, email or call (email@example.com or 877-849-0670). You can also call in during the show each week at noon (EST) – 1:00 pm on WINT 1330 AM, call 440-946-9468 to ask your question to the Maximum Value Partners’ coaches.