Dien Rice
March 17, 2016, 11:01 PM
I would buy an existing business.
We are in the golden age for buying existing business using very little of your own cash.
I was talking to a seller 2 days ago who when asked the question What are you going to do if you don't sell? His answer... I will shut it down. He went on to explain that he is almost 70 and he wants to move on.
Hi,
I agree there is an opportunity here!
I went to an investor event last night (which I've been going to now and then nowadays - part of my journey into the world of finance)...
One of the companies which presented is a company which does pretty much exactly what you said...
That is, buy existing businesses, with owners who are ready to retire...
Now, this company looks for businesses which are making from $1m to $5m in profits. They also look for companies with an owner ready to retire, and management who'd like to take over the business, but don't have the money to buy it outright.
They help the management do a "management buyout". They provide the money. The management put up some of the money, and also own part of the business. Then, they let the management run the business without interfering, and take part of the annual profits as their share.
They get investors to pony up the cash. (That's why they were pitching last night... for investors...)
By the way, Warren Buffett does something very similar, when he buys companies outright (See's Candies, Borsheim's Fine Jewelry, and others)...
I also know of another business which also does something similar, but a little different. They look for businesses which are making a profit, but have poor marketing. They then buy the business out.
They improve or "fix" the marketing. This hopefully then leads to increased profits.
They can then sell the business at a higher price for a profit. The higher business profits justify a higher selling price.
Now is a golden time for this kind of business...!
Many successful businesses, if they can't sell, and if the owner's kids don't want to take it over, just shut down when the owner retires...
Best wishes,
Dien
We are in the golden age for buying existing business using very little of your own cash.
I was talking to a seller 2 days ago who when asked the question What are you going to do if you don't sell? His answer... I will shut it down. He went on to explain that he is almost 70 and he wants to move on.
Hi,
I agree there is an opportunity here!
I went to an investor event last night (which I've been going to now and then nowadays - part of my journey into the world of finance)...
One of the companies which presented is a company which does pretty much exactly what you said...
That is, buy existing businesses, with owners who are ready to retire...
Now, this company looks for businesses which are making from $1m to $5m in profits. They also look for companies with an owner ready to retire, and management who'd like to take over the business, but don't have the money to buy it outright.
They help the management do a "management buyout". They provide the money. The management put up some of the money, and also own part of the business. Then, they let the management run the business without interfering, and take part of the annual profits as their share.
They get investors to pony up the cash. (That's why they were pitching last night... for investors...)
By the way, Warren Buffett does something very similar, when he buys companies outright (See's Candies, Borsheim's Fine Jewelry, and others)...
I also know of another business which also does something similar, but a little different. They look for businesses which are making a profit, but have poor marketing. They then buy the business out.
They improve or "fix" the marketing. This hopefully then leads to increased profits.
They can then sell the business at a higher price for a profit. The higher business profits justify a higher selling price.
Now is a golden time for this kind of business...!
Many successful businesses, if they can't sell, and if the owner's kids don't want to take it over, just shut down when the owner retires...
Best wishes,
Dien
