Buying a Business - No personal guarantees

[Doctor.IM]

Hello everyone!

First of all, I’d like to give a huge thanks to MJ, and all the active people of the forum. Thank you so much for your knowledge guys!

My question is the following..

I’m looking to buy a FBA business.

I’ve 3 years of experience with Amazon.
I want to raise the capital, but do not want to put personal guarantees on it.

I’ve heard that it’s doable if I put 30% of the money on the table, and give the investors a fairly big chunk of equity.
I’m looking for ~1M deals.
I may eventually team up with more experienced sellers.


Do you have any recommendations/info about that/the feasibility of it ?

Thank you so much and have a nice day!


Dr.IM

 

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[Atu]

Questions:

1. What do you have that they can get only by giving you 1M$.
2. Can you create a huge team of other experts without extra 1M$?
3. What is that tiny grain of fear inside you which prohibits you from giving personal guarantees?
4. Why it is impossible for you to build a profitable business with the cash you have now?
5. Big cash is big responsibility. Do you absolutly need that pain in your head?

And best wishes

 

[SteveO]

Think about this from a lending perspective. Would you loan money against something with few hard assets? I would loan on something that I could recoup ALL of my money through a repossession. Anything else is a risk. A lender does not participate in upside. To get some trivial amount of return with a high risk does not make sense.

Personal guarantees are a basic requirement for almost all loans unless they are securely backed by a strong asset.

 

[Doctor.IM]

Questions:

1. What do you have that they can get only by giving you 1M$.
2. Can you create a huge team of other experts without extra 1M$?
3. What is that tiny grain of fear inside you which prohibits you from giving personal guarantees?
4. Why it is impossible for you to build a profitable business with the cash you have now?
5. Big cash is big responsibility. Do you absolutly need that pain in your head?

And best wishes

Dear Atu,

Thank you so much for your reply. It will give me some food for thoughts and guidelines on where should I go.

Thank you so much for that!

Think about this from a lending perspective. Would you loan money against something with few hard assets? I would loan on something that I could recoup ALL of my money through a repossession. Anything else is a risk. A lender does not participate in upside. To get some trivial amount of return with a high risk does not make sense.

Personal guarantees are a basic requirement for almost all loans unless they are securely backed by a strong asset.

Dear SteveO,

Thank you so much for your reply. I'm honored that someone with your success still take the time to help beginners.

I totally agree with you. In fact, I'm trying to find the truth about Gurus who promise to acquire businesses with no money down, and no personal guarantees.

I'm afraid that I'll need to put some skins in the game!

Thank you so much for both of your replies, and have a nice day!

Dr.IM

 

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[jazb]

motivated sellers and owner finance

 

[SteveO]

motivated sellers and owner finance

This is a great option. These types of deals usually come with baggage though. But that can be very lucrative!

I have done many of these. Always in a down market though.

 

[Doctor.IM]

motivated sellers and owner finance

This is a great option. These types of deals usually come with baggage though. But that can be very lucrative!

I have done many of these. Always in a down market though.

Interesting, thank you so much for your replies.
It seems that it's the methodology that Dan Pena teaches.

So I conclude that there's more chances to do a deal without (with limited) personal guarantees dealing with a private seller (100% owner financed) than with big banks/PE ?
Which seems logical.

Thank you so much and have a nice day!

 

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