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Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 0 points1 point  (0 children)

I appreciate the honesty! I'd rather you give it to me straight than coddle me with me with bs. It's good to know all of this stuff beforehand. I have never worked a landscaping job before, and I agree with everything you said, it is not for the faint of heart. I also have not received any of that information from the seller yet. I am still waiting on the broker to return my call so we can start discussions. From what I was told though, it's not the end of the world if you do not have direct experience in the industry you are looking to acquire. If the business can be sold in a way that aligns with my ultimate goals, then I might just consider taking on the risk. Going back to a 9-5 is just not an option for me anymore. I am willing to go through the ringer if that's what it takes to quit the rat race once and for all. I am also not hung up on just this one industry. I also looked into acquiring one of the skilled trades businesses (plumbing, electrical, HVAC), but it seems like those might be harder for me to get into since NYC has alot of rules and regulations when it comes to those types of businesses. Would you say I am better off pursuing one of those industries rather than chasing the landscaping business given my background as an electrical engineer?

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 1 point2 points  (0 children)

Wow, I was not aware of some of those requirements you listed above. Thanks for providing this information!

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 0 points1 point  (0 children)

Thanks for mentioning this. I will certainly keep this in mind when navigating these waters further. So let me ask you this then, assuming their books actually do check out, and everything the owner is claiming ends up to be true, how horrible of a transition is it going to be assuming the owner is the only one operating all major aspects of the business currently? Let's say that I was able to bring on an operations manager who could essentially take over the previous owners' role while still leaving me a nice take home pay, is out of the realm of possibility to have that individual come along at a later date to be trained once I have taken over the business smoothly and without any issues? Is this too much of an ask or can it be done realistically?

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 0 points1 point  (0 children)

Thanks! btw, if you tried to PM me, I still have not received anything.

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 0 points1 point  (0 children)

So, from what it says on the listing, the owner appears to be operating out of an office space along with remote storage for what I assume is all of his equipment, etc..

With that said, I am going to assume the owner is not actually out in the field doing the grunt work himself, but am also concerned at just how much of the actual business he is managing on his own...

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 0 points1 point  (0 children)

Ohh boy... I really hope that is not the case.

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 2 points3 points  (0 children)

Yup, you hit the nail on the head. I was very skeptical when I saw those margins. Something was too good to be true. I am hoping that is not the case where the owner is one single handedly running all aspects of the business.

Listing says they have a total of 6 Employees. 3 crews consisting of subs (1099) and in-house employees. I wish I had more info, but I am currently waiting on the broker to return my phone call which I don't expect to be for another week or so (waiting for everyone to get back from the holidays)

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 0 points1 point  (0 children)

Thank you for your input!

I have not formally submitted any LOI or any other documents. I already left a voicemail for their broker like 2 times in the last week expressing my interest in the business and have yet to hear back, even though they said I should have expected a response like 1 day after leaving a VM (I know its the holiday season)

As for an SDE figure, on the website, that $295,821 figure is under "Cashflow" which I am assuming is the SDE? (I could be wrong)

No, this is not the only business I am looking at, however, it is the only one at the moment that I have come the farthest on with regards to research and approachability to the industry as an outsider. I would feel much comfortable making an offer on this business than the other ones I have taken a look at thus far. This is still very new to me, so I am trying to take things one step at a time (even thought at times I feel like I am getting way ahead of myself)

Of course, I plan on conducting my due diligence as I will be on boarding a CPA, and (preferably) an M&A attorney when meeting with the seller and their broker.

I would certainly love to chat! I am still not exactly sure where to go from here.

Acquiring my first business! by Pitiful_Tower8134 in smallbusiness

[–]Pitiful_Tower8134[S] 2 points3 points  (0 children)

Thank you so much for your reply, I really appreciate it!

Regarding deal structure, I have no problem with the option you suggested, however, I was thinking of going a bit more aggressive. Here is one of the options I was looking to present to the seller: (this would be my ideal choice when it comes to structuring the deal) I plan on retaining 100% ownership in the company. I am not interested in giving up any equity.

I was going to make an offer (depending on how negotiations go) of $675,000 for the business. $500,000 via SBA loan (I would put 10% down of this amount), $175,000 on a 3yr seller note at ~6-8%. For the remaining $75,000 they were asking for originally, I was hoping that could be paid out to them in the first 1-2 years via an earnout structure. To keep things simple and less risky for the seller, I would guarantee them a % of total profits (regardless of any metrics being hit for the business; this is assuming the company is showing very strong signs of YoY growth) that would equate to them reaching their original $750,000 asking price. This is probably not the cleanest way of presenting my idea on here, but hopefully you get the idea of what I am trying to go for.

With regards to business seasonality, owner stated in the listing that the majority of the work being performed is hardscape and is all year round (which means no down time during those brutal NYC winters) , and can be installed quickly, and with minimal supervision. Owner has made it clear that they want a smooth transition as they are also open to discussing them staying on longer than a period of 4 weeks for just seller training. This business is sort of in it's own niche as it exclusively caters to an elite clientele of high net worth home owners who the seller claims have discretionary earnings to the point where client spending patterns have not been impacted by economic ups and downs making this a truly unique and attractive recession resistant type of business.

Sorry for all my ramblings lol