Buying someones business

[Done-it-again]

There are a lot of smart business guys on here so I thought I would ask for opinions.

There is another business that is in the same niche business as I am but handles a different section than we do. I know that most of their installers are gone, their website is offline and the owners are pushing 70 to mid 70's. I've talked to some corporate customers that we share and they don't really know what's going on and haven't heard anything from them.

So my questions is. How do I ask said business if they are interested in selling and hoping they don't get offended? I have never spoken to the owners but they know our business, so I would assume they know my name. Do you ask straight up? through an email? I'm not a smooth talker so I could get tongue tide if it goes sideways so I would rather send an email. (easy way out)

They have some bigger competitors (higher end equipment) that have lots of $$$$. But not all customer need the high level of equipment, but they would buy them out to kill a smaller competitor. I just would like the option to do so if they are looking to get out.

What say you!

 

[rivermobster]

@pronstar

 

[Mandelon]

Pick up the phone and call them.

Explain what you are doing and see if they have any interest in selling or somehow working together. Tell em the truth, you're just starting out on your own and like to do business the old fashioned way. I think they would appreciate that.

 

[Done-it-again]

Pick up the phone and call them.

Explain what you are doing and see if they have any interest in selling or somehow working together. Tell em the truth, you're just starting out on your own and like to do business the old fashioned way. I think they would appreciate that.

I'm already partners in a family business so would be looking at bringing that equipment under us and expanding what we do, offering more of a turn key end to end solution.

But I do agree with you, just never know what New Jersey attitude you are going to get on the phone.....lol

 

[HitIt]

If they are in their 70s they would probably prefer a phone call. Maybe send them an email to let them know the gist of what you would like to discuss so they aren't caught totally off guard. Then set up a time for a phone call.

 

[WhatExit?]

I agree with calling them. If you have concerns about doing that, have a friend (or lawyer) do it under his name (not mentioning yours/your company's name) asking if they have any interest in selling their company

 

[Done-it-again]

I agree with calling them. If you have concerns about doing that, have a friend (or lawyer) do it under his name (not mentioning yours/your company's name) asking if they have any interest in selling their company

Thought about this as well or even my accounting firm as they would need to confirm the books and potential counter pricing of the business. Then in my head I think it would make them think big $$$ could be coming. In the end it's only worth what it's worth. Just the bigger guys can pay more just to take the equipment out.

 

[Done-it-again]

If they are in their 70s they would probably prefer a phone call. Maybe send them an email to let them know the gist of what you would like to discuss so they aren't caught totally off guard. Then set up a time for a phone call.

Good point. Thanks.

 

[Angler]

Pick up the phone and call them.

Explain what you are doing and see if they have any interest in selling or somehow working together. Tell em the truth, you're just starting out on your own and like to do business the old fashioned way. I think they would appreciate that.

THIS. Treat the Guy with respect, call him.

 

[Xtrmwakeboarder]

Pick up the phone and call them.

Explain what you are doing and see if they have any interest in selling or somehow working together. Tell em the truth, you're just starting out on your own and like to do business the old fashioned way. I think they would appreciate that.

Spot on.

 

[Cole Trickle]

Call and be cool.

Let them know who you are and what you do and see if they could be interested in moving forward with talks.

Worst they can say is were not interested or my kid is taking it over. I imagine an email would fall on deaf ears.

 

[C08H18]

Meet in person, be truthful. In nothing else, you may learn how to work with them for mutual benefit.

 

[Done-it-again]

I guess I knew what was best, just was hoping i could do it the other way. lol.

One of their installers came by yesterday (working for another company now) gave me another name that works for them or did. Going to give him a call tomorrow and see if he wants to work for us. Apparently these guys haven't worked scene Oct/Nov and the company hasn't given them any info whatsoever.

 

[OLDRAAT]

If you do purchase and merge, would relocation of existing personnel be required or will you run it as a separate facility?

 

[Mandelon]

I get calls and emails all the time from guys saying they have a buyer for my business. I know they are full of shit. This old man probably has been getting the same calls for years.

I really think you need to be just a regular guy. If you have a lawyer call him or an accountant he will probably think #1 it is bullshit, or #2 he's gonna get a big payday. If you are a normal Joe, like he used to be 40 years ago, you will, in my opinion be taken much more seriously.

I would say not to even start out asking to buy him out, but by seeing if there is some way you could work together. If he is interested, then offer to meet him to discuss things. Let him give you advice, pointers and helpful info. Once he sees what you are about, and he trusts you, he may suggest you buying him out. If the sale/merger/partnership is HIS idea.... then you will do a lot better.

 

[Done-it-again]

If you do purchase and merge, would relocation of existing personnel be required or will you run it as a separate facility?

Its not a big shop from what I can see on google maps, perhaps a 10-14k sq ft building... Not that I'm much bigger at 19k. I would say the old guys are the employees, so I don't think anyone else is there bedside a book keeper and perhaps a machinist or 2. Again all speculative, just knowledge from the years working next to their crew on jobs.
I would bring the all manufacturing in one place, but still run it as 2 separate company's, I think it would be easier that way.

 

[Done-it-again]

I get calls and emails all the time from guys saying they have a buyer for my business. I know they are full of shit. This old man probably has been getting the same calls for years.

I really think you need to be just a regular guy. If you have a lawyer call him or an accountant he will probably think #1 it is bullshit, or #2 he's gonna get a big payday. If you are a normal Joe, like he used to be 40 years ago, you will, in my opinion be taken much more seriously.

I would say not to even start out asking to buy him out, but by seeing if there is some way you could work together. If he is interested, then offer to meet him to discuss things. Let him give you advice, pointers and helpful info. Once he sees what you are about, and he trusts you, he may suggest you buying him out. If the sale/merger/partnership is HIS idea.... then you will do a lot better.

We get fax's (the only fax's we get) that their is a buyer for our company. We just through it away. I agree with the point about a layer/accountant...

I'm going to call their other installer tomorrow and see what hes been up to and feel that out and see what info I can get. Then make a plan to call the owner... At their age I'm sure they are not to keen with emails....lol. It was just easier for me.

 

[LuauLounge]

You might be exactly the guy he is looking for. Someone to keep the employees working and to keep his clients happy.
From experience, we have a niche business, clients that have been with us over 20 years, employees that have been with us 20 years and have had folks want to buy us out. The last dick we spoke to, after 5 minutes, I wouldn't sell my worst enemy to him.

 

[RichL]

I get calls and emails all the time from guys saying they have a buyer for my business. I know they are full of shit. This old man probably has been getting the same calls for years.

I really think you need to be just a regular guy. If you have a lawyer call him or an accountant he will probably think #1 it is bullshit, or #2 he's gonna get a big payday. If you are a normal Joe, like he used to be 40 years ago, you will, in my opinion be taken much more seriously.

I would say not to even start out asking to buy him out, but by seeing if there is some way you could work together. If he is interested, then offer to meet him to discuss things. Let him give you advice, pointers and helpful info. Once he sees what you are about, and he trusts you, he may suggest you buying him out. If the sale/merger/partnership is HIS idea.... then you will do a lot better.

Without knowing any particulars, this sounds like an excellent approach.

 

[Uncle Dave]

Pick up the phone and call him.

Offer to discuss it over lunch. Face to face is always better/

Tell him the truth be understanding and humble. If you can architect it in a way where you both get something out of it (classic win-win ) he'll likely be more amenable.

 

[Looking Glass]

Thought about this as well or even my accounting firm as they would need to confirm the books and potential counter pricing of the business. Then in my head I think it would make them think big $$$ could be coming. In the end it's only worth what it's worth. Just the bigger guys can pay more just to take the equipment out.

BUT!!!!

IMO, you come in Wanting/Asking then all of a Sudden jump into wanting to see the Books, and stating it is ony worth, what it is worth.

I know if you came at me with this Style and Attitude = I would look you in the Eyes, Step Back and Ask, Did I miss something here?

You came to me asking and Sure Not the other way.

Slowly begin with a careful, asking IF For Sale and then carefully proceed. There are some that just may say Hit the Trail, with an attitude that is Rough.

 

[Done-it-again]

BUT!!!!

IMO, you come in Wanting/Asking then all of a Sudden jump into wanting to see the Books, and stating it is ony worth, what it is worth.

I know if you came at me with this Style and Attitude = I would look you in the Eyes, Step Back and Ask, Did I miss something here?

You came to me asking and Sure Not the other way.

Slowly begin with a careful, asking IF For Sale and then carefully proceed. There are some that just may say Hit the Trail, with an attitude that is Rough.

Wouldn't just jump in and wanting to see the books, and that is the wrong approach. Just simply asking if in fact are they thinking about selling and how to go about it I'm having trouble with. Sometimes/most of the time i'm to much up front and to fast, and can come off as a dick. But that's not really me.

Starting a small business there is a lot if blood and sweat and tears..... But you need to take that out of it and it's only really worth what the books say it is in reality. The sentimental value is out the window. So if they are wanting to sell then the business needs to be valuated.

 

[lakemadness]

I’ve chased after a few acquisitions. Came very close but never inked a deal. I’ve sold one business.

In each situation it was a direct call we initiated. Asked them to lunch. We were upfront and told them we wanted to discuss our businesses. Who knows what could come out of it

Do you share any mutual connections that could make a warm intro for you?

One thing to think about; you make it sound like they might be struggling. You share some clients. Can you get in to their line of business on your own? Might save save some money.

One thing I learned going through an acquisition all the way up to last minute details before it fell apart- the deal costs. Legal and accounting consulting expenses were much, much more than we had planned. It was eye opening.

 

[RandyH]

I bought a guy out once and he financed that business for 5 years for us. He didn't want it in cash...He wanted the income over time and we even covered him for the same time with health insurance. And the interest we paid him is deductible. Win/win.

 

[Done-it-again]

I’ve chased after a few acquisitions. Came very close but never inked a deal. I’ve sold one business.

In each situation it was a direct call we initiated. Asked them to lunch. We were upfront and told them we wanted to discuss our businesses. Who knows what could come out of it

Do you share any mutual connections that could make a warm intro for you?

One thing to think about; you make it sound like they might be struggling. You share some clients. Can you get in to their line of business on your own? Might save save some money.

One thing I learned going through an acquisition all the way up to last minute details before it fell apart- the deal costs. Legal and accounting consulting expenses were much, much more than we had planned. It was eye opening.

Thanks for your insight.

Yes we share a lot of customers as they do a section of business we don’t do. In the past they are working on the other side of the wall in the plant when we are working the other side.

I only know what I assume. I’ve been told many times over the last 3-4 years by a mutual engineer who works for the mutual company that has a revenue between 6-7 billion. Why don’t I buy them as they never answer the phone hard to get a hold of and the old guys are grumpy.

Now with the longest running installer of 26 yrs leaving cause he hasn’t worked since oct/nov of 20. With no communication seems odd, he even flew back to NJ a month ago to get his tools back and no discussion with the owners. Same guy shows up in my office yesterday that has a job with his new company, to give me another guys info who worked for them as well that hasn’t worked. So my assumption is they are hurting and covid didn’t help.

I’m already in the line of work and this will just and another equipment list that we can supply and support.

Hard to judge a business this last year and half but I would say normally the are about a 2 million gross business. Would say a typical new project is 500-650k and can do 3-4 a year if the bigger company’s are expanding. Not including the smaller guys.

Interesting about the counsel cost. I’ve had an idea cost in my head but not sure now. lol. 20-30k.

 

[Done-it-again]

I bought a guy out once and he financed that business for 5 years for us. He didn't want it in cash...He wanted the income over time and we even covered him for the same time with health insurance. And the interest we paid him is deductible. Win/win.

That would be my plan as well if we can agree on that.

 

[LHC Kirby]

I would say not to even start out asking to buy him out, but by seeing if there is some way you could work together. If he is interested, then offer to meet him to discuss things. Let him give you advice, pointers and helpful info. Once he sees what you are about, and he trusts you, he may suggest you buying him out. If the sale/merger/partnership is HIS idea.... then you will do a lot better.

THIS

 

[Xring01]

Real Simple
Pick up the phone
Set an appointment

Be prepared with an offer that opens up the discussions which opens up negotiations

Hate to say it, but its that simple

 

[lakemadness]

Thanks for your insight.

Yes we share a lot of customers as they do a section of business we don’t do. In the past they are working on the other side of the wall in the plant when we are working the other side.

I only know what I assume. I’ve been told many times over the last 3-4 years by a mutual engineer who works for the mutual company that has a revenue between 6-7 billion. Why don’t I buy them as they never answer the phone hard to get a hold of and the old guys are grumpy.

Now with the longest running installer of 26 yrs leaving cause he hasn’t worked since oct/nov of 20. With no communication seems odd, he even flew back to NJ a month ago to get his tools back and no discussion with the owners. Same guy shows up in my office yesterday that has a job with his new company, to give me another guys info who worked for them as well that hasn’t worked. So my assumption is they are hurting and covid didn’t help.

I’m already in the line of work and this will just and another equipment list that we can supply and support.

Hard to judge a business this last year and half but I would say normally the are about a 2 million gross business. Would say a typical new project is 500-650k and can do 3-4 a year if the bigger company’s are expanding. Not including the smaller guys.

Interesting about the counsel cost. I’ve had an idea cost in my head but not sure now. lol. 20-30k.

I would easily double your estimate to start with.

I dont the business obviously. But if you're that close to what they do, give serious thought to just getting in that line of work. List out pros and cons of acquisition vs. start up.

 

[Spudsbud]

Yea. definately. Face to face.

 

[PaPaG]

There are a lot of smart business guys on here so I thought I would ask for opinions.

There is another business that is in the same niche business as I am but handles a different section than we do. I know that most of their installers are gone, their website is offline and the owners are pushing 70 to mid 70's. I've talked to some corporate customers that we share and they don't really know what's going on and haven't heard anything from them.

So my questions is. How do I ask said business if they are interested in selling and hoping they don't get offended? I have never spoken to the owners but they know our business, so I would assume they know my name. Do you ask straight up? through an email? I'm not a smooth talker so I could get tongue tide if it goes sideways so I would rather send an email. (easy way out)

They have some bigger competitors (higher end equipment) that have lots of $$$$. But not all customer need the high level of equipment, but they would buy them out to kill a smaller competitor. I just would like the option to do so if they are looking to get out.

What say you!

Never be hesitant about asking another business if they are interested in selling, the worst that can happen is they are not, you never know til you ask. ASK STRAIGHT UP and do it soon.

 

[lakemadness]

I would say not to even start out asking to buy him out, but by seeing if there is some way you could work together. If he is interested, then offer to meet him to discuss things. Let him give you advice, pointers and helpful info. Once he sees what you are about, and he trusts you, he may suggest you buying him out. If the sale/merger/partnership is HIS idea.... then you will do a lot better.

I did just this. Approached a business, met with the owner for lunch. I wanted to buy the company but set the meeting up as a discussion on how we might be able to work together. By the end of the lunch the guy said " Listen, why dont you just buy my business"

 

[Done-it-again]

I would easily double your estimate to start with.

I dont the business obviously. But if you're that close to what they do, give serious thought to just getting in that line of work. List out pros and cons of acquisition vs. start up.

Copy on the counsel estimate.

We have been dabbling in similar equipment for the last couple of years. But I need to buy it from another company, so my margins are crap and held to whatever bs they tell me.

If they sell between 800k-1mil in my opinion it would be worth it. I can gross that in a year, just don’t know what they show on their P&L per job. Perhaps their are only 15-20% margins and that’s to low for the amount of engineering involved. Should be 30-35%.

We are in the garment material handling. This is equipment is for industrial laundry. It’s a rail system that holds 300-500 lb bags that feed large washers.

 

[samsah33]

Copy on the counsel estimate.

We have been dabbling in similar equipment for the last couple of years. But I need to buy it from another company, so my margins are crap and held to whatever bs they tell me.

If they sell between 800k-1mil in my opinion it would be worth it. I can gross that in a year, just don’t know what they show on their P&L per job. Perhaps their are only 15-20% margins and that’s to low for the amount of engineering involved. Should be 30-35%.

We are in the garment material handling. This is equipment is for industrial laundry. It’s a rail system that holds 300-500 lb bags that feed large washers.

Small businesses typically sell at around 3-5x cash flow, but that can vary depending upon other factors such as reputation (eg goodwill), capital required to start similar biz from scratch, existing trained workforce, trade secrets, leases, committments, customer lists, attrition, intellectual property, etc... Bringing this up because you're talking about a price already without seeing any numbers. Another factor that you'll have to deal with is the current owner's emotional connection to the biz (illustrated by many recommendations to pick up the phone and talk to the guy), which can significantly impact price. w/r/t legal and accounting, you can pre-negotiate those rates in advance to avoid sticker shock.

 

[shunter2005]

Odd story. Few years ago, I had been looking for some one of a kind parts for some wind deflectors for my boat. The company had shut down, out of business. I had left messages on the only number I could find but got no response. Finally got a call from owners wife. She said she had some parts and I asked her many she had. Some other guys were interested in the same parts. She never called back. So, I called back again but got no response. I just kinda blew it off, but about a 6 months later, out of the blue, while I was towing the new to me Hallett from Havasu to Texas, I got a phone call from the owner. Told him I was looking for some of his propietary parts to build my own deflectors. We talked for about an hour and he wound up asking me if I might be interested in purchasing the rights and inventory to start the company back up. In short, I wound up buying it very reasonably. He was more interested in seeing his "baby" continue on than making a lot of money. He wanted someone with some interest in what he was doing.

The point is, just a nice phone call and some good old fashioned shop talk and genuine interest in what he has to offer, might just be the right formula to get him to offer to sell or at least put you both on that path.

 

[Cobalt232]

We have done a few small acquisitions over the years. Take it slow.

Last year due to the social distancing we started outsourcing some work to another lab in Florida. They have done great work for us for the past year. The owners are in their 70's and we inquired about buying them. So my business partner went to visit the facility. He said it was a mess, but we could fix it. They own the building, but we would just lease it. It took them a while to get their books in order to send us the P&L and balance sheet. The financial situation was a mess. It turned out the owner has pumped personal money into the business for 20 years to keep it afloat for the employees. Hard pass.

 

[Done-it-again]

Small businesses typically sell at around 3-5x cash flow, but that can vary depending upon other factors such as reputation (eg goodwill), capital required to start similar biz from scratch, existing trained workforce, trade secrets, leases, committments, customer lists, attrition, intellectual property, etc... Bringing this up because you're talking about a price already without seeing any numbers. Another factor that you'll have to deal with is the current owner's emotional connection to the biz (illustrated by many recommendations to pick up the phone and talk to the guy), which can significantly impact price. w/r/t legal and accounting, you can pre-negotiate those rates in advance to avoid sticker shock.

Thanks for your input. Yes, i have thought about pricing with thinking about my business. Again the business is only worth what it shows on the P&L, there are ways to show that you not that good, but at the same time it screws you trying to sell. My price is speculative at best. I don't need their building, but would possibly need their machinery and whatever inventory they have along with the given. Work force can be tricky as office staff wouldn't relocate, but installers don't need to as they travel nation wide. Or I just use my own crew for that work as well.

In the end perhaps its way above what i can afford or it doesn't make since.

 

[Done-it-again]

We have done a few small acquisitions over the years. Take it slow.

Last year due to the social distancing we started outsourcing some work to another lab in Florida. They have done great work for us for the past year. The owners are in their 70's and we inquired about buying them. So my business partner went to visit the facility. He said it was a mess, but we could fix it. They own the building, but we would just lease it. It took them a while to get their books in order to send us the P&L and balance sheet. The financial situation was a mess. It turned out the owner has pumped personal money into the business for 20 years to keep it afloat for the employees. Hard pass.

My impression of this company for knowing them for a long time, that their business would be similarly structured the same way. Just not dumping money in for many years, but perhaps the last couple.

 

[DLC]

I would tread lightly and approach the way you would want to be approached, if you can make it an US rather than you / I you will make headway!

lots of different options to close the deal you need to find out what they want or what is important to them

 

[LHC30]

Too Late - I know someone who found out who you were talking about and just made a deal for their whole portfolio.....


Now, if I can only find the right buyer before I split it all up...

 

[LuauLounge]

Odd story. Few years ago, I had been looking for some one of a kind parts for some wind deflectors for my boat. The company had shut down, out of business. I had left messages on the only number I could find but got no response. Finally got a call from owners wife. She said she had some parts and I asked her many she had. Some other guys were interested in the same parts. She never called back. So, I called back again but got no response. I just kinda blew it off, but about a 6 months later, out of the blue, while I was towing the new to me Hallett from Havasu to Texas, I got a phone call from the owner. Told him I was looking for some of his propietary parts to build my own deflectors. We talked for about an hour and he wound up asking me if I might be interested in purchasing the rights and inventory to start the company back up. In short, I wound up buying it very reasonably. He was more interested in seeing his "baby" continue on than making a lot of money. He wanted someone with some interest in what he was doing.

The point is, just a nice phone call and some good old fashioned shop talk and genuine interest in what he has to offer, might just be the right formula to get him to offer to sell or at least put you both on that path.

Was this Wind A Way?

 

[shunter2005]

Yes sir.