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  • Small Business Expansion Opportunity – Advice Needed!

    updated 7 months ago 0 Member · 1 Post
  • Charles

    October 29, 2019 at 2:02 pm

    Hi all, hoping for some help here. My husband and I own a small electronic integration firm (think smart homes and home theaters) in a large metropolitan area where there are relatively few companies that do what we do (thanks to the very high cost of living and lack of workers that can perform the technical work). Our main business competitor (and a good friend) passed away unexpectedly last month. His family has taken over the business, however, it has reached a point where they have realized that they cannot actually run this business due to lack of industry knowledge. It would seem that their liabilities are mounting. They have reached out to us to open discussions regarding selling the business to us. We have our meeting this week to discuss what they want, however, we are aware that they are overvaluing the business (as it was once a highly profitable company, due to having the correct people in place). After the death of the owner who was integral to selling the services and programming systems (both of which are hard to find) they are unable to sell the jobs at the rate they once were. In fact we have had to help them quite heavily over the past month (with ordering of parts, even assistance in bidding jobs) just to help them out during the transition as we were friends with the owner. Essentially their backs are against a wall, liabilities are mounting and cash is quickly depleting. We are not looking to take advantage of the situation, but we always want to be honest with them that the business is NOT worth what they think it is. This is a tricky situation as they are still grieving and we really don’t want to come off poorly. In purchasing a business we would normally assess with an asset-based approach but we are uncertain how to maneuver this scenario as the business is going to basically bankrupt if we don’t step in. As the industry is small here we know their employees well and they have all reached out to ask for jobs if things go under with their current company. (Again, this is a very small industry and these folks would be SO valuable to us). With this being said, the business has a stellar reputation and would be incredibly additive to our business and expansion plans. We just don’t know how to finesse this situation properly. We need their people and want their name… however, we could live without the name, let the business go under and their people are interested in working for us anyway. (This is not what we want, but it is the reality of where things are going if they don’t work with us). We just don’t want to be slimy and be on the up and up. They do have two work vans, a showroom (we are uninterested in that as we have our own) and we are uncertain about inventory but we imagine there is a fair amount. Any advice on how to evaluate their business in this scenario? – by hq overview goosie2019 – –

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