Dispatches from District 48
Archive for the ‘Small Business’ Category.
In the previous post on buying a company, I discussed what I have learned about finding and valuing a small company. In this post, I will discuss a second technique I used to find a seller, and then show how we conducted due diligence and selected the form of the deal (e.g. C vs. S Corporation, Asset vs. Equity purchase). In the next installment, we will get to the various legal documents and financing strategies.
When I describe what I do, the most common reaction is for people to ask "So how did you get into that?" The answer, as they used to say in the old electric razor commercials, is that it interested me so much, I bought the company.
Now, at some level, corporate acquisitions were not new to me -- I had worked with acquisitions and acquisition analysis in many of my corporate jobs. But these were large acquisitions - at least $20-$40 million in sales, and it was funded out of a large corporation's cash flow.
One fateful day, I decided that A) I hated working for other people and B) I had no groundbreaking entrepreneurial ideas of my own so that C) if I wanted to own a decent sized business, I would have to buy one.
Unfortunately, I had NO CLUE how to go find companies that were for sale and that I could afford. In fact, I was not sure at that point such opportunities even existed (again, when the rubber met the road, my Harvard MBA let me down). And, if the questions I get asked all the time are any indication, I was not the only one who didn't know how any of this worked.
So, let me share how it all worked for me. This is part 1. Also see part 2 and part 3.
Continue reading ‘Buying a Company Part 1 (or how I got into this)’ »
