On this week’s Dirty Secrets of Small Business, co-host, Jack Mencini talks about his experience of acquiring a company with 7 employees where the owner who had fallen on health issues. Prior to Jack taking over, the owner’s wife was running the company. Unfortunately, she just couldn’t handle it and Jack came in to buy it as it was close to be foreclosed by the bank. Jack was able to look at the company, use his expertise, turn it around and have it sold a few years later.
According to Adam Sonnhalter, this was an existing company and the owner’s wife who was in her 80s and had no business experience was thrust into the role of trying to run the company after her husband became ill. The company was still operating and the UPS man was still dropping off packages and business was still being done. The company had been around for 40 years and Jack realized that there was still potential and momentum going. This wasn’t a business that was starting from scratch. If you buy it right… not paying too much and really looking seriously at the price and terms, you could have a very profitable business venture.
Don’t worry about offending the seller when you are looking to buy a company. Very often the seller can’t defend the selling price. How you put your value on it is very different. The company you see is worth X to you and what you are willing to pay. If you are miles apart… don’t worry about it. Stick to what you know and be analytical on how much you value the company and how much you want to spend for it. Put your offer out there and explain how you value the company.
Don’t spend too much time upfront…Jack and Adam advise that what the seller is telling you is accurate and correct. Don’t spend hours and weeks on your evaluation because you become involved and emotional.
Get the company off the market and sign papers of intent and then do the due diligence of digging deep. Don’t wait too long to make an offer. Also…don’t tap all your valuable resources to do your first deal because it puts too much pressure on you.
If you are itching to buy a business to start your first journey of owning a company or you are on the path to increase your profitability by acquiring a company, listen to the entire podcast of Dirty Secrets of Small Business and the January 30th podcast. Access all the Dirty Secrets of Small Business podcasts on iTunes or here.
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If you have a success story or a question you would like to share, email or call (firstname.lastname@example.org 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!