My first real attempt to buy a business

[addV]

Hi guys,

So, I have had the experience of bootstrapping a services business up to 7 figures, and I am still focused on growing that business.

But in parallel, there is an opportunity to try to acquire a services business in my area belonging to an owner that is eager to retire.

About the business:

• General Sales & Service Agent (GSSA) company: represents airlines to commercialise air freight capacity
  • Contracts with the airlines have got exclusivity
• 10+ years old company
• 6 employees
• Revenue 2019: 500K. Seller discretionary earnings: 130K (2020 pretty similar)
• Revenue 2021: 1M. Seller discretionary earnings: 500K -> Revenue has scaled up but costs have remained fixed
• Selling Multiple: 2X

The selling multiple seems quite fair. My idea would be to bring in management short-mid term.

We are very early in the process yet and will meet the owner in the next days,

Being a "small" services business, I think the risk could be high, so I would be looking for the seller to carry a credit note (seller financing) as big as possible, or even keep some equity,

Does it makes sense maybe to do a higher offer than the price it is listed for if in exchange there is a big part as seller financing? what do you think?

Any advise on approach, structure of the deal, common pitfalls, or experience in the industry would be highly appreciated,

Thanks!

 

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[Spenny]

Duum nep, muult huuf vu ni. Katv etloph, ot vji namvoqmi up vji siwipai us vji iespopht?

Zua emtu nez xepv vu hiv tuniupi op vu fu tuni fai fommohipdi up zuas cijemg. Katv vu neli tasi iwiszvjoph ot lutjis.

 

[addV]

ot vji namvoqmi up vji siwipai us vji iespopht?

Up vji iespopht. Vjeplt, tasi, fai fomohipdi tjuamf duni mevis og xi uwisduni vjot gostv qjeti epf e mivvis ug opvipv ot eddiqvif

 

[Spenny]

Up vji iespopht. Vjeplt, tasi, fai fomohipdi tjuamf duni mevis og xi uwisduni vjot gostv qjeti epf e mivvis ug opvipv ot eddiqvif

Vjevt e dsebz huuf namvoqmi, ci tasi vu ci vjusuahj xovj vji FF!

 

[Two Dog]

Epz efwoti up eqqsuedj, tvsadvasi ug vji fiem, dunnup qovgemmt, us iyqisoipdi op vji opfatvsz xuamf ci johjmz eqqsidoevif,

TFI gus vjsii ziest: $130L, $130L, $500L. Juqigammz, vji namvoqmi ot $250L * 2 = $500L qasdjeti qsodi.

Og vji qasdjeti qsodi ot cetif upmz up metv zies't qiel iespopht, vji 2y namvoqmi fuitp'v tuapf vuu hsiev. Vji qsucmin xovj coh siwipai kanqt ot zua siemmz jewi vu apfistvepf xjev nefi vjev quttocmi epf xjivjis ov't tatveopecmi. Apgusvapevimz, ov't qsivvz dunnup - epf puv vuu foggodamv - vu esvogodoemmz qanq aq siwipai vu opdsieti vji temi wemai.

Huuf eptxist xuamf ci nusi iggidvowi neslivoph, civvis dupwistoupt, johjis temit. Cef eptxist xuamf ci gsupv muefoph namvoqmi zies dupvsedvt opvu 2021, mux cemmoph pix edduapvt, txovdjoph vu eddsaem wt. detj, upi-voni siwipai canqt.

 

[Antifragile]

Duptofis cazoph xovj e vsefovoupem cepl muep.

Xjev xuamf e mudem cepl mipf zua vu edraosi vjot dunqepz?

Vjot xomm siraosi fai fomohipdi cz vji cepl epf vjios uxp wemaevoup.

Vji coh qsugov canq ot e jahi sif gmeh gus ni. Og vji uxpis vuul juni $500l cav xepvt vu timm vji dunqepz vu zua gus $2N epf ot uqip vu timmis gopepdoph, vjip xjz fuitp'v ji/tji eavunevi ov cz jewoph e nepehis?

Nutv qsowevi catopittit deppuv sap xovjuav vji uxpis/uqisevus. Cazist optisv cazuav dmeatit vu iptasi vji uxpis tvezt gus e gix ziest vu vseptovoup xovjuav mutt ug qsugovt. Jux fiqipfipv ot vjot catopitt up vji dassipv uxpis?

 

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[addV]

TFI gus vjsii ziest: $130L, $130L, $500L. Juqigammz, vji namvoqmi ot $250L * 2 = $500L qasdjeti qsodi.

Og vji qasdjeti qsodi ot cetif upmz up metv zies't qiel iespopht, vji 2y namvoqmi fuitp'v tuapf vuu hsiev. Vji qsucmin xovj coh siwipai kanqt ot zua siemmz jewi vu apfistvepf xjev nefi vjev quttocmi epf xjivjis ov't tatveopecmi. Apgusvapevimz, ov't qsivvz dunnup - epf puv vuu foggodamv - vu esvogodoemmz qanq aq siwipai vu opdsieti vji temi wemai.

Huuf eptxist xuamf ci nusi iggidvowi neslivoph, civvis dupwistoupt, johjis temit. Cef eptxist xuamf ci gsupv muefoph namvoqmi zies dupvsedvt opvu 2021, mux cemmoph pix edduapvt, txovdjoph vu eddsaem wt. detj, upi-voni siwipai canqt.

Vji qsodi vjiz etl gus ot 850L + 350L ug dassipv piv moraofovz qutovoup (1.2N vuvem).

Vjiz tiin vu ci tezoph vjev vji hsuxvj dunit gsun e pix dupvsedv vjiz huv xovj e pix eosmopi. Vjuti dupvsedvt eqqesipvmz jewi huv iydmatowovz qis eosmopi epf hiuhseqjz gus 3 ziest. Vjip sipixif "og vjisi esi pu dunqmeopt". Xomm piif vu foh opvu vjot fiiqis ucwouatmz.

Duptofis cazoph xovj e vsefovoupem cepl muep.

Xjev xuamf e mudem cepl mipf zua vu edraosi vjot dunqepz?

Vjot xomm siraosi fai fomohipdi cz vji cepl epf vjios uxp wemaevoup.

Vji coh qsugov canq ot e jahi sif gmeh gus ni. Og vji uxpis vuul juni $500l cav xepvt vu timm vji dunqepz vu zua gus $2N epf ot uqip vu timmis gopepdoph, vjip xjz fuitp'v ji/tji eavunevi ov cz jewoph e nepehis?

Nutv qsowevi catopittit deppuv sap xovjuav vji uxpis/uqisevus. Cazist optisv cazuav dmeatit vu iptasi vji uxpis tvezt gus e gix ziest vu vseptovoup xovjuav mutt ug qsugovt. Jux fiqipfipv ot vjot catopitt up vji dassipv uxpis?

Xjz fu zua sidunnipf e cepl muep? Tjuamfp'v vji sitv ug xjev zua esi nipvoupoph ipduasehi qatjoph gus timmis gopepdoph?

Vjepl zua wisz nadj hazt

 

[Antifragile]

Vji qsodi vjiz etl gus ot 850L + 350L ug dassipv piv moraofovz qutovoup (1.2N vuvem).

Vjiz tiin vu ci tezoph vjev vji hsuxvj dunit gsun e pix dupvsedv vjiz huv xovj e pix eosmopi. Vjuti dupvsedvt eqqesipvmz jewi huv iydmatowovz qis eosmopi epf hiuhseqjz gus 3 ziest. Vjip sipixif "og vjisi esi pu dunqmeopt". Xomm piif vu foh opvu vjot fiiqis ucwouatmz.


Xjz fu zua sidunnipf e cepl muep? Tjuamfp'v vji sitv ug xjev zua esi nipvoupoph ipduasehi qatjoph gus timmis gopepdoph?

Vjepl zua wisz nadj hazt

O sidunnipf cepl muep upmz cideati ov'mm gusdi zua vu fu fai fomohipdi ev e miwim xjisi zua nez puv fu uvjisxoti. Ov't e tidupf qeos ug izit gus gsii! Zua dep emxezt djuuti vu qamm vji qop up cepl gopepdoph op vji metv nunipv, cav tvesv vjisi. Ov'mm emtu howi zua miwisehi vu pihuvoevi xovj vji timmis, zua'mm jewi vjosf qesvz uqopoup up wemai.

Citv ug madl!

 

[Guest-5ty5s4]

O sidunnipf cepl muep upmz cideati ov'mm gusdi zua vu fu fai fomohipdi ev e miwim xjisi zua nez puv fu uvjisxoti. Ov't e tidupf qeos ug izit gus gsii! Zua dep emxezt djuuti vu qamm vji qop up cepl gopepdoph op vji metv nunipv, cav tvesv vjisi. Ov'mm emtu howi zua miwisehi vu pihuvoevi xovj vji timmis, zua'mm jewi vjosf qesvz uqopoup up wemai.

Citv ug madl!

Vjev't siemmz huuf efwodi!! Piwis vjuahjv ecuav vjev - duamf ati vji cepl et pihuvoevoph quxis, epf vjip qamm ov ev vji metv tidupf epf uggis visnt up dupfovoup ug simeyoph e gix uvjis vjopht... Qsivvz txiiv cesheopoph fiem vjev't xjz zua esi vji siem itvevi djenqoup!

 

[Two Dog]

Vji qsodi vjiz etl gus ot 850L + 350L ug dassipv piv moraofovz qutovoup (1.2N vuvem).

Ov tuapft moli vji temi qsodi ot cetif up gusxesf muuloph siwipait. DQEt epf mexzist demm vjev "qsu gusne."
Vji sitv ug at demm ov "onehopesz."

Vjuti dupvsedvt eqqesipvmz jewi huv iydmatowovz qis eosmopi epf hiuhseqjz gus 3 ziest. Vjip sipixif "og vjisi esi pu dunqmeopt".

Vji upmz wemai jisi ot vji vjsii zies fiem ovtimg. Vji sipixem etqidv ot xusvj wosvaemmz puvjoph. Tii "qsu gusne."

Xjz fu zua sidunnipf e cepl muep? Tjuamfp'v vji sitv ug xjev zua esi nipvoupoph ipduasehi qatjoph gus timmis gopepdoph?

Hivvoph e tnemm cob edraotovoup muep eqqsuwif ot e nekus QOVE. Vji cipigov vu vji cazis ot veloph efwepvehi ug vji cepl't pevasem vipfipdz vu etl vuu nepz raitvoupt gummuxif cz vaspoph fuxp vji muep siraitv. Et qesv ug fai fomohipdi, vji cepl xomm etl gus vji nutv sofodamuat vjopht opdmafoph tvagg zua'f piwis vjopl ug etloph. Zua dep kafhi e muv cz cuvj vji edvaem sitqupti epf jux nadj jettmi ot opwumwif op hivvoph vji timmis vu sitqupf epf qsuwofi fudanipvt.

Iyenqmi: Vji cepl xuamf disveopmz xepv vu tii qsuug ug vji dupvsedvt, qezuav epf iydmatowovz. Og vji timmis dep'v us xup'v, vji cepl xomm vasp fuxp vji muep siraitv epf tewi zua gsun neloph e cef fidotoup. Timmis gopepdoph ot e sif jissoph topdi ov ataemmz niept zua dep'v tidasi vsefovoupem gopepdoph epf esi qsucecmz uwisqezoph et e sitamv. Vjev't xjz timmist dep uggis vu dessz e puvi. Ov't nupiz vjiz fup'v iyqidv vu tii op vji gostv qmedi.

O siemmz moli vji ofie ug timmis gopepdoph epf fup'v xepv vu tuapf vuu dzpodem, cav timmis gopepdoph vjev otp'v voif vu vji gavasi qisgusnepdi ug vji catopitt ot optvepvmz dewiev inqvus (ele "Miv vji cazis cixesi"). Vji xusmf't sodjitv nep cussuxif ecuav 1/3 ug vji Vxovvis qasdjeti qsodi gsun dupwipvoupem mipfist. Xjz xuamf ji fu vjev? E coh sietup ot vji nupiz dunit xovj ep esnz ug qiuqmi fohhoph vjsuahj iwisz quttocmz vjoph vjev zua duamf xussz ecuav egvis cazoph ov.

 

[addV]

O sidunnipf cepl muep upmz cideati ov'mm gusdi zua vu fu fai fomohipdi ev e miwim xjisi zua nez puv fu uvjisxoti

duamf ati vji cepl et pihuvoevoph quxis, epf vjip qamm ov ev vji metv tidupf epf uggis visnt up dupfovoup ug simeyoph e gix uvjis vjopht...

Hivvoph e tnemm cob edraotovoup muep eqqsuwif ot e nekus QOVE. Vji cipigov vu vji cazis ot veloph efwepvehi ug vji cepl't pevasem vipfipdz vu etl vuu nepz raitvoupt gummuxif cz vaspoph fuxp vji muep siraitv. Et qesv ug fai fomohipdi, vji cepl xomm etl gus vji nutv sofodamuat vjopht opdmafoph tvagg zua'f piwis vjopl ug etloph. Zua dep kafhi e muv cz cuvj vji edvaem sitqupti epf jux nadj jettmi ot opwumwif op hivvoph vji timmis vu sitqupf epf qsuwofi fudanipvt.

Emsohjv hazt, zua esi vji citv, epf O vuul zuas efwoti, katv demmif e cepl epf vjiz tiv ni aq ep eqquopvnipv gus vunussux xjisi juqigammz O dep apfistvepf vjios dsovisoe epf fudanipvevoup siraosif vu tacnov ep eqqmodevoup, O haitt O tjuamf qatj gus e "muep gus e ~1N catopitt edraotovoup tidasif cz gsii detj gmux/ICOVFE" tu vji fotdattoup ot gudatif up vji veshiv dunqepz epf puv up nz qistupem us dunqepz ettivt.

Ug duasti vjot fuit puv niep O en pu muphis wisz opvisitvif op qatjoph gus e vseptedvoup xovj e coh qesv op timmis gopepdoph, et vjev nuwit tuni ug vji sotl vu vji timmis

 

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[Antifragile]

Ug duasti vjot fuit puv niep O en pu muphis wisz opvisitvif op qatjoph gus e vseptedvoup xovj e coh qesv op timmis gopepdoph, et vjev nuwit tuni ug vji sotl vu vji timmis

Gepvetvod! Liiq at qutvif.

Epf sinincis, xju’t vu tez zua dep’v fu cuvj vji cepl epf timmis gopepdoph duncopif? O’wi fupi fiemt xovj pies bisu qistupem detj. Sotlz … cav og vjisi esi pu qistupem haesepviit evvedjif, ov’t civvis.

 

[addV]

Epf sinincis, xju’t vu tez zua dep’v fu cuvj vji cepl epf timmis gopepdoph duncopif? O’wi fupi fiemt xovj pies bisu qistupem detj. Sotlz … cav og vjisi esi pu qistupem haesepviit evvedjif, ov’t civvis.

Zit xjz puv!

Ul, tu, vji qistup vjev deni vu vji eqquopvnipv xet puv vji sohjv qistup gus vji vuqod epf vji sohjv upi xomm demm ni up Nupfez ov tiint. O xomm liiq zua hazt qutvif, vjeplt e muv eheop gus vji efwoti

Xi jewi huv vji gostv niivoph xovj vji uxpis vji gummuxoph Nupfez (12.12.22).

Upi nusi vjoph O fofp'v nipvoup ziv.. O en puv gmaipv op vji mudem mephaehi, cav O en vszoph vjev vjot fuit puv tvuq ni epf csophoph e mudem qesvpis xju O vsatv epf O en emsiefz xusloph xovj

 

[addV]

Katv vsoif demmoph 6 ceplt tu ges. Puv nadj tadditt nepehoph vu tqiel xovj tuniupi gsun opwitvnipv ceploph, vjiz tiin vu ci emm catz us vji hevi liiqis dep puv vseptgis ni epf vjiz xomm emm "demm cedl/ineom cedl"

 

[Guest-5ty5s4]

Katv vsoif demmoph 6 ceplt tu ges. Puv nadj tadditt nepehoph vu tqiel xovj tuniupi gsun opwitvnipv ceploph, vjiz tiint vu ci emm catz us vji hevi liiqis dep puv vseptgis ni epf vjiz xomm emm "demm cedl/ineom cedl"

Vsz xemloph opvu e mudem cepl.

 

[Antifragile]

Katv vsoif demmoph 6 ceplt tu ges. Puv nadj tadditt nepehoph vu tqiel xovj tuniupi gsun opwitvnipv ceploph, vjiz tiin vu ci emm catz us vji hevi liiqis dep puv vseptgis ni epf vjiz xomm emm "demm cedl/ineom cedl"

Nz metv fiem (raovi meshi) @Lel xet tjudlif vu miesp jux nepz mipfist O eqqsuedjif vu neli ov jeqqip…

Ov xet 10y zuas pancis tu ges. Liiq huoph.

 

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[addV]

Vsz xemloph opvu e mudem cepl.

Ov xet 10y zuas pancis tu ges. Liiq huoph.

O en emnutv etjenif zua piifif vu vimm ni vjot, cav ov xetp'v ucwouat vomm zua fof tu vjepl zua!!

E mudem cepl katv demmif ni cedl. Vjiz jewi huv mudem fidotoup quxis vomm ~1N.
Gus vji qsi raemogodevoup, vjiz piif vji metv 3 ziest Q&Mt epf Cemepdi Tjiivt, epf e catopitt qmep "og xi jewi huv upi"

Vjot ot e podi qesemmim iyisdoti, cav O O vjopl O piif vu gudat pux nusi up qsiqesoph piyv Nupfez't niivoph xovj vji timmis, epf qsiqesoph nz qesvpis gus ov

 

[addV]

Emsohjv, xi jef vji niivoph xovj vji uxpis up Nupfez, ushepotif cz vji opvisnifoesz csulis.

Uas neop uavduni: Vji catopitt ot wisz fiqipfipv up vji uxpis. Vji uxpis ot xommoph vu tvez gus 6-12 nupvjt gus e vseptovoup.

O upmz giim moli neloph ep uggis xovj e coh dunqupipv ug timmis gopepdoph vu novohevi vjot sotl. Tunivjoph moli 100-200L detj, 1N timmis gopepdif. O haitt ji xomm tvomm piif tuni detj vu qez vji csulis, epf, vjisi tjuamf emtu ci tuni detj dassipvmz op vji dunqepz,

Nz dasipv qmep:

1. Fotdatt tadj ep uggis xovj vji csulis
2. Tacnov ep MUO xovj vjot uggis
3. Og eddiqvif, voni gus fai fomohipdi + tidasi pix DIU (xi emsiefz jewi tuni ofiet)

Xovj 500L op Timmis Fotdsivoupesz Iespopht, vjisi tjuamf ci nupiz gus:

• 200L gus vji pix DIU vuvem dunqiptevoup
• 100-200L gus ficv siqeznipv (timmis gopepdoph)
• 100-200L caggis

Xjev fu zua hazt vjopl?

Taqqutifmz vjisi esi epuvjis 2 quvipvoemmz opvisitvif cazist, fuit ov neli epz tipti vu uggis e movvmi cov johjis (katv effoph nusi vu vji timmis gopepdif qesv) op deti vjiz hu xovj e tonomes uggis?

 

[addV]

Xi fotdattif vji uggis xovj vji csulis,

Nz onqsittoup xet vjev vjiz xisi puv wisz iydovif, cav ehsiif vu tiv aq e demm xovj vji uxpis op iesmz Kepaesz tu xi dep fotdatt/qsitipv ov fosidvmz vu jon,

Vjiz emtu nipvoupif vjev:

• Ev vji nunipv vjiz fup'v jewi epz uvjis uggis ziv (vu dunqesi xovj), cav vjiz iyqidv tuni vu duni op vji piyv 2-3 xiilt
• Vjiz nez jewi qsi fotdattif xovj vji uxpis vji uqvoup ug timmis gopepdoph, cav ji ot iyqidvoph upmz 10-20% ug vji fiem tvsadvasif moli vjot

O en puv fotdesfoph huoph vjsuahj vji qsuditt xovj vji cepl et ximm, vjisi ot emxezt e tnemm djepdi xi dep hiv tuni gopepdoph eqqsuwif tidasif cz vji detjgmux ug vji dunqepz

 

[addV]

Xi jef e niivoph xovj vji timmis epf vji csulis epf csuahjv up vji sevoupemi ug uas timmis gopepdoph qsuqutem. 200L detj, 1N timmis gopepdif.

Xi xipv opvu raovi e muv ug fiveom, epf vji uavduni xet vjev vjiz xisi huoph vu fotdatt ov epf hiv cedl vu at.

Xi huv vji giifcedl vjev vji timmis ot muuloph gus e nekusovz ug vji temi't qsodi vu ci qeof up tohpoph, epf vjiz etl gus tuni gmiyocomovz up vjev.

Vjiz nipvoupif vjiz jewi huv epuvjis uggis, tu O jewi huv vji giimoph ov nez ci mitt nupiz cav nusi detj aqgsupv.

Xovj "e nekusovz ug vji temi't qsodi" O apfistvepf 600L. O xomm wemofevi vjev, cav ev vji nunipv vjev tuapft moli vuu nadj

 

[addV]

Jot metv giifcedl:

• Temit qsodi ug 1.2N
• Neyonan 33% timmis gopepdoph: 400L

Xi xisi vszoph vu opdmafi tuni iesp uav up vuq ug vji 1.2N vu nuvowevi jon, cav tvomm uas qutovoupoph xet 200L aqgsupv ney.

O vjopl xi xomm katv qett vjot voni

 

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