Buyout

Jonathan Ellis

Jonathan Ellis

moderator
Has anyone ever bought out a competitor? Please respond if you have
 
I will call you today. I worked day yesterday so I did not have to work last night so I was in bed early.
 
I've done it in other businesses. In the dry cleaning I knew all my competitors. I watched them grow and gave them advice. Sometimes you could see indicators that things were going south like - divorce, drugs, debts with suppliers, etc. Once I bought out a competitor by simply paying off his debt to the plant. This is the easiest way to grow your business. Ask Daryl Merza.
 
Tony Shelton said:
I've done it in other businesses. In the dry cleaning I knew all my competitors. I watched them grow and gave them advice. Sometimes you could see indicators that things were going south like - divorce, drugs, debts with suppliers, etc. Once I bought out a competitor by simply paying off his debt to the plant. This is the easiest way to grow your business. Ask Daryl Merza.
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So are you suggesting to pay someone to sleep with the owners wife, plant drugs in their brownies (and stronger than that green stuff) and encourage them to buy a lot of equipment they do not need? LOL.
 
love to, but baby will be here any day now. I cant go half way acros the country with a newborn at home
 
Jonathan Ellis said:
love to, but baby will be here any day now. I cant go half way acros the country with a newborn at home
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Congrats in advance on your new addition. I have 4 awesome kids.
 
Be careful buying a business. Sometimes you are assuming their debts such as taxes. Just buy their accounts and equipment if it makes sense.
 
IndyExterior said:
Be careful buying a business. Sometimes you are assuming their debts such as taxes. Just buy their accounts and equipment if it makes sense.
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That's good advice. I've never bought a name, just customer lists and equipment. Part of the deal was a personal introduction to the customers.
 
Jonathan Ellis said:
So are you suggesting to pay someone to sleep with the owners wife, plant drugs in their brownies (and stronger than that green stuff) and encourage them to buy a lot of equipment they do not need? LOL.
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I never gave them bad advice. I wanted them to succeed. But sometimes people are just too hard headed to believe anything you tell them and you just have to shake your head and watch them fail. And be there to buy their accounts when that happens.
 
Tony You are such a shrewd businessman. hahahahaha

You have a lot of great insight into business, I am sure that those that listened to you and did what you suggested did good.
 
Make sure the accounts they have are profitable. Talk to the clients with them to get assurances they are willing to have you do the work. I saw a hood cleaner here sell his business and within six months he lost almost all of the clients. Not to better work to LOWER prices. This guy might be selling because he is not charging enough and losing his shorts.
 
The old way was revenue x 5. In this economy, who knows?
 
IndyExterior said:
Be careful buying a business. Sometimes you are assuming their debts such as taxes. Just buy their accounts and equipment if it makes sense.
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Thats how I did all of mine very clean that way.
 
joshuabcrutcher said:
Thanks, carolina... Anyone else want to chime in on their pricing formulas???
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It's different when you are simply buying customer lists vs. lists + equipment + AR, etc.

We always looked at net x 6 + wholesale prices on any misc equipment + 75% of AR (if that was in the deal) and that was our top offer. (But I'm a tightwad)

Even in a good economy it wasn't uncommon for businesses to remain up for sale for 1-4 years so the buyer has the upper hand. (Our dry clean delivery service was for sale for 15 months)

When a business is for sale the owner is selling it for a reason. You need to find that reason and emphasize it in your negotiations.

Today net x 6 would probably be considered good money for a service business.

(I know this goes against everything they teach in college, but if college professors knew anything about business they wouldn't be wasting their time teaching a bunch of spoiled young nimrods all day):yikes:
 
Tomdurbin said:
Make sure the accounts they have are profitable. Talk to the clients with them to get assurances they are willing to have you do the work. I saw a hood cleaner here sell his business and within six months he lost almost all of the clients. Not to better work to LOWER prices. This guy might be selling because he is not charging enough and losing his shorts.
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Good advice.
 
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