Hello all,

I have been working doing bugs and wildlife for a local business basically since I graduated high school. I am 23 years old, got married last summer, and also bought a home. My boss has recently began to show interest in selling the company, I am interested in buying it. I do not have any significant capital to work with, nor do I have much equity in my home. As far as I know I have very good credit and don't have any significant debt besides my home.

Has anyone here ever bought a business and can share any pointers with me? Just looking for some general info on what my possibilities may be.

Much thanks
Carl

I envy you Carl. If you were my kid and the investment was a good one, I would certainly back your loan. Since we've got all the emotion out of the way, I'll let the businessmen on here take over now.

You would certainly have to put some money down....then perhaps do an owner financing...if you are lucky.

This industry is ripe for consolidation of the good operators. There is so much efficiently to gain being larger. The challenge is maintaining a high level of service and consistency in a business where every job is different and a lot can go wrong.

How big is the business? IE how many employees? How much recurring revenue, like annual contracts? Is he willing to sell to you? You should be able to work with him. PC companies usually sell for the recurring revenue for one year. The profit margin is usually pretty high. When the name changes, new ownership takes over, especially if its a large franchise, there is a lot of lost customers.
Since you have worked for the company for several years, many of the customers will already know you and that would be a point to make in your announcement of takeover. I don't know his profit margin or your salary. I would suggest a business lawyer set up the details, but I would offer some kind of buyout program. He mentors you for six months to a year on how to run the business. You run the business for the next year, giving him 25% of the profits, you get your salary, plus any profit and continue for five years.
You are giving him, over time, more than the big companies would, he's still involved, to a point, and you get to use his experience. Get a lawyer involved, to set boundaries, as to who's ideas rule.

Good post Lundy! Sounds like you might have had some experience along this line.

Just figured I would report back anyone looking to buy a bidness expect to have 10% cash money to put as a down payment. In my case that was going to be about 14 grand. Not having that kind of money banked I backed out. Maybe someday I will start my own.

Thanks for the input fellas

Have a good one!

Carl

I don't know your States regulations on starting a PC business. Here in MN you have to work under a Master license for two years before you can test for a Master license, which you need to be on your own. When you are ready to start on your own, PM me, and I will give you some advice on what works for me. Maybe I can come to you and show you what I do.
Paul W., I haven't bought another company, but I am a member on a PC website and I have read several posts about the process. I have read about several acquisitions both buying and selling.

Dont bail yet. It may take him awhile to find a buyer, a year or more. If you work hard to save, you may be able to get the money before he sells. And if he sells before you can buy it, well you got money put away to start your own later.

For fun, let's back calculate...

10% down....is a $140,000 purchase price. To get that valuation on the business, it probably brings in $140,000 divided by 3 in income....$46,000/year.

What would your annual cost to repay the remaining $126,000 loan? Is the loan with the owner?

The other thing to consider....can you grow the business faster/better than previous owner?

although that's a great question, no one buys a business thinking they can't.

Surely....it's called risk capital.