Best way to acquire a business closing down with no potential to piss in?

[derekschmoe]

So I’m a small renovation contractor with experience as a large GC. I have a connection closing down because he wants to go to seminary school. He (from the outside) runs a successful concrete business. I started my own company a couple years ago and don’t have hundreds of thousands of dollars to put down for a new business. Looking for advice on best move/s. My current thoughts: 1) let him close down and undercut him and take his crew and their expertise and grow my own flatwork company 2) go to bank and hope for f*** all 3) work something out with him that is financed through him so he has skin in the game and can coach on his current model and improve as necessary. We haven’t met for any financials and I have a decent idea he is doing $1MM-$3MM/yr but don’t know for sure. Any advice for an idiot stressing is much appreciated.

 

[bkimmerz]

@derekschmoe Meet with them first and get a look at some financials. Concrete is a tough business, some guys do a lot of revenue and yet barely break even, other guys seemingly print money with them. Need to see what their EBIDTA is, what their asset schedule looks like as well as depreciation schedule on those assets.

This way you’ll at least be able to see what a purchase price looks like, see if an owner financed deal is workable, or at least have some decent information for the bank to get a loan from there.

 

[derekschmoe]

@bkimmerz Is a loan possible with a 28 month old business? I barely show income (intentionally) from said current business.

 

[bkimmerz]

@derekschmoe Why would you want to barely show income?

And sure it’s possible at 28 months old. Depends on the bank and personal finances.