Buying a Business

Since last summer, I’ve been looking for a business to buy. In that time, I’ve looked at dozens of prospectuses, communicated with plenty of brokers, and setup alerts on a handful of business-for-sale sites. Yesterday, I finally pulled the trigger on an auction listing and am currently working with the owner to finalize the sale.

This isn’t the way I planned for things to happen, and the business actually meets very few of my criteria. When I set out, I was interested in a larger, more well established business with employees. Additionally, I wanted to use some type of funding in order to gain some leverage. Instead, this business is small, very young, works with a couple of part-time contractors, and I purchased using all cash.

I first noticed the listing last week on Flippa. I was already familiar with the business, having come upon it recently while looking for some services to use for one of my ecommerce businesses. That immediately caught my attention, especially since I was relegated to a waiting list when I tried to signup.

The listing was very detailed and the owner of the site explained that he just didn’t have time to run the business properly, though it also didn’t require all that much time. The owner also mentioned another site he ran, that has a decent following, which helped assure me it wasn’t a scam. After taking another look at the site, I brainstormed a number of ideas of how to grow the business and felt it could fit in well with some other projects.

I checked the listing a few times during the week. Despite not meeting much of my criteria, I figured that if I could get it for the right price, there’d be very little risk, and a relatively high reward. By Sunday evening, the leading bid was at about 1/3rd of the reserve price, so I decided to put a bid in at the reserve price with about an hour to go. There were no other bids so suddenly, on Father’s Day, I had bought myself the gift of a business.

The deal is in escrow now. There are a few issues to iron-out, but nothing too complicated so it should close relatively soon, but I never like to count anything as a done deal prematurely. Lots more to come.

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