Business #2 was going well, increasing my net worth and paying the bills. Although things were good, I still continued to search for other businesses. My mentor always preached to find gold, you need to go through a lot of dirt. There are tons of businesses out there that are just jobs, poor paying jobs at that, but I find it interesting to follow up on leads and determine each businesses metrics.
While going through my normal routine I found a post, “Electrical Business for sale by owner.” As usual, I followed up. There was no broker involved so I was put through to Mr. Beasley. We had a nice chat. I told him of my background in the sign business and he liked my experience. We set up a meeting in person.
Mr. Beasley and I had a lot in common. I was six foot five, he was five foot six. We both liked to wear baseball caps and liked two kinds of pie, hot and cold. We hit it off splendidly. He expressed to me it was time to retire. I reviewed the numbers and he had a very stable business, a classic 60/0/20/20. He was the big fish in a small pond. Everyone knew and liked Mr. Beasley. At one point, he was named man of the year in his town. I could see right away that there was some serious name recognition and goodwill in this company.
I took it slow. His asking price was overvalued by about 33%. I did not argue the price. I just continued to ask questions and find out more information. I went on some job estimates with him and was even was invited to the company Christmas party. I took this opportunity to sell myself to his current employees. They of course were concerned about their future. I was sincere when I expressed the desire for them to stay and make a future together. They recognized that Mr. Beasley was slowing down and as a new owner, I was excited to speed up the business to reach its potential. This would ultimately provide a more secure future for us all.
After the holiday season was over Mr. Beasley looked me in the eye and said, “What it is going to take for you to buy my business?” I told him what I could afford and the terms I could live with. I put 1/3 down and Mr. Beasley carried back a note for 2/3 of the sales price at 8% for 5 years. We shook hands and the deal was done.
He then really surprised me. He told me he wanted to continue to work for my newly acquired company at a very reasonable rate. As long as he could golf twice a week and take 3 weeks of vacation whenever he wanted he was willing to stay around and help. This of course, made him another billable employee, a very experienced one at that.
After all, Mr. Beasley just wanted someone that he liked and trusted to take over his business. He wanted someone that would take care of his creation. I learned a ton from Mr. Beasley. His business was profitable and enjoyable. Little did I know the lessons learned from him would prove valuable for future acquisitions. Mr. Beasley worked with me for the next 6 years until his third bout of cancer finally got him.
Keys To Success
- Negotiations are not always about price. For Mr. Beasley, it was about friendship and trust
- A Good name and reputation have value
- Great sellers increase the chances of a successful transfer
- Find as many mentors as you can find, the more diverse the better
- To find gold you need to go through a lot of dirt
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