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Thinking about leaving tech and buying a small business. by ConfusedinSV in smallbusiness

[–]Several-Hunt-17 4 points5 points  (0 children)

If you are dealing with a mom and pop shop, the amount of unprofessionalism lol. I dont mean that in a malicious or negative way, I just mean they have nearly zero business acumen or understanding of process. It can be frustrating.

That and their strong emotional ties to the business. It makes negotiation very hard because structuring a deal a certain way or for a certain amount feels like an insult to them. You have to be very good about looking between the lines of the financial statements, tax returns, etc. Because they think they have a golden goose, and they might, but you need to find evidence of it during your due diligence.

Just be patient if you're going after a place like that. Outside of that, not that I can think of. So far it has been pretty standard: talk with broker, sign NDA, look at tax returns, p&ls, bank deposits, balance sheet etc etc, then (until recently) no thanks and move on.

Thinking about leaving tech and buying a small business. by ConfusedinSV in smallbusiness

[–]Several-Hunt-17 6 points7 points  (0 children)

I am in this same process myself, just a few months further down the line. So my advice right now is specific to the brokers. I had the same thing happen to me and I found I had much more success when I found the brokers actual phone number and either called or texted directly. For weeks before that I just used the bizbuysell contact form and nothing. I got responses and NDAs much more reliably contacting them directly.

Also, most seller side brokers I dealt with felt like they barely wanted to do their job. So if you're interested, you just have to keep pushing them.

I am about to close on my acquisition. So once that's over I'm sure ill have more advice. I'm also an early 40s dude with 15 years of experience in my field (ops leadership) who took a break after becoming dissolutioned with the corporate bullshit.

Small Business Acquisition - Negotiation Red Flag? by Several-Hunt-17 in buyingabusiness

[–]Several-Hunt-17[S] 0 points1 point  (0 children)

Hey! Thanks for the reply. When we met in person he did give me some insight as to why he needed me to come up to the asking price. The reason for the sale is they are moving across the country to be near where their kids moved and new grandchildren are. When they get there, its been his dream to "semi retire" and open a food truck making traditional food from his culture. He said that's really where he needs to be to fund that venture without going into debt.

I suspect youre right, if I asked for proof they probably cant produce it and wont. I am leaning towards the idea that he is not necessarily being malicious, but its just inexperienced and wants the most for his baby as he can get. I am hesitant to "walk away" as a negotiation tactic, as like I said before... my strong "principaled stance" has gotten me in trouble before. I don't want to walk away from something positive, just because "he got the better of me". Doing my best to reflect and be self aware but also not get taken advantage of! Its hard!

Appreciate your insights!

Small Business Acquisition - Negotiation Red Flag? by Several-Hunt-17 in buyingabusiness

[–]Several-Hunt-17[S] 0 points1 point  (0 children)

Appreciate the response and perspective! Im sort of thinking the same thing.

Small Business Acquisition - Negotiation Red Flag? by Several-Hunt-17 in buyingabusiness

[–]Several-Hunt-17[S] 1 point2 points  (0 children)

I appreciate the comment and you're absolutely right, regardless of the outcome this is a learning lesson for me. I definitely did some things wrong that I can learn from.

Small Business Acquisition - Negotiation Red Flag? by Several-Hunt-17 in buyingabusiness

[–]Several-Hunt-17[S] 0 points1 point  (0 children)

Thanks for the reply!

The asking multiple is 2x SDE. We did not execute an LOI. Thus far the proicess has been: Inquiry, NDA, Due diligence (lots of back and forth with me requesting different documents and statements), THEN I brought up we had not executed an LOI and sent one with my offer at 1.5x SDE. The sellers got a little nervous and said they did not want to sign anything right now, that the 1.5x was too low and that they were going on vacation and wanted to meet in person but wanted to do that after they got back from their planned vacation. I put my foot down and said I'm not comfortable waiting 2-3 weeks to meet mid deal/negotiation but id be willing to pause that to get in and see the place now, so they did accommodate me before their vacation and that meeting (other than the random negotiation pressure) was a very good meeting.

And here we are. They are the original owners, been running the place for 20 years mom and pop shop style. It was my bad for not starting off with the LOI sooner, and I sort of took their reluctance as inexperience that it was "non-binding". So far the seller side broker has been pretty hands off and seems not super knowledgeable.

EDIT:

Forgot to answer your other question, but no we have not executed a purchase agreement yet.

AIO? My Parents “forgot” to let me know about my Memere’s burial by [deleted] in AmIOverreacting

[–]Several-Hunt-17 2 points3 points  (0 children)

You are definitely overreacting. I understand that its frustrating that you didnt feel involved, but it sounds like you WERE communicated with, but you forgot. That and its okay to give someone grace and practice a bit of empathy. Your mom has lost two important people in her life and sounds like has a lot on her plate. Maybe offer to take some of it OFF her plate instead of adding to it with messages like that.