A Scaffolding Business Sale that Required Money and Enthusiasm
A Scaffolding Business Sale that Required Money and Enthusiasm
The cornerstone of an easier deal in business broking is finance availability. Yes, the attitude of the buyer and seller (willing or not so willing) must be mentioned. The business genre and positioning in the market-place must be considered and maybe the way the wind blows!
When I consider the more confronting deals in my shotgun magazine of successes, I quickly remember the difficulties caused by dealing with under financed
businesses and their stretched buyers.
Do not get me wrong, that tight financial challenge is essentially good for the buyer and the business if it means that fiscal responsibility is achieved. However, beyond that in the murkiness of desperation some ‘fancy foot work” is required.
I am not talking about dangerous shortcuts that would not stand up to the inevitable rigors of investigation or normal business practice. The deal that springs to mind is where a seller was wanting to retire from his successful scaffolding hire business to continue the bliss of grey nomadism and surfing. There was no shortage of prospective buyers but the seller wanted a cash deal.
Banks and other lenders where impressed with the strength of the business and the incredible profitability but still insisted on the asset model to back up the request for funds to purchase the business. Scaffolding is not seen as a viable asset.
Fortunately, there was a flow of buyers but the trend was subject to finance, vendor finance requests or disgusting “lowballing”. One such example was two brothers that really wanted the business and negotiated with their $40,000!
They suggested that they would be prepared to run the business that turned over several million per year and “pay” the vendor over a number of years using the proceeds. The sad reality was that I was very impressed with their credentials but could not help them with any business let alone this one.
Another buyer came in the form of an older couple that were experienced in business and had sufficient funds to buy the scaffold business. She was very excited about the business although her husband’s enthusiasm was ambivalent as he was also focussed on being a grey nomad.
Can you see where this is going? With careful management, each party (money, experience) together with youth, (hunger ability and hard working ethics), could be an excellent fit.
A company was started. It issued 100 shares and each member received 25 shares as directors. The young shareholders worked the business and the older couple managed, (some times remotely) the business.
They have regular zoom meetings and all decisions are recorded in company minutes. The older couple lent the new company the full purchase price and this debt is paid off as would any business loan be handled.
The secret of this success is that each member had a need that was fulfilled by the partnership. Each person is protected and there is a comprehensive partnership agreement in place. The value of the business has increased substantially and there are buy out opportunities or contingencies.
Tags: buying business owner small business tips selling
About the author
Ray Dye
As a previous multiple business owner in South Africa, Canada and Australia, Ray has an exceptionally high level of expertise when it comes to knowing ...
