Career Consultant Who Bought a 7-Figure Manufacturer

So if you would, explain to us that feature of the acquisition, please.

Yeah, so it was a stock deal. And by the way, I hope I do this justice because it's tricky and it was something I had to get my head around. But, you know, you want to make sure that you're buying the business with enough gas in the tank, so to speak, and often that metaphor will be used.

Say those components again, please, of that million? Yeah.

So that's the accounts receivable plus the work in progress, what's on the floor or underway, inventory at the time, and all that minus the accounts payable. That would come up to around the million mark. And when we arrived at that...

Worked with Calder on it. The sell side broker, they had their view on it. We had our view. We looked at 24 months of balance sheets and arrived at that figure.

Manufacturing is tricky. Most businesses are not walking around with a clipboard every day, measuring WIP. So that was probably the toughest component, but we got to something that, you know, I think was a reasonable assumption.

And so once we had that, we were able to go back and look at 24 months, get to what we thought was a reasonable number. And it turns out the business, you know, had a really good, some good tailwinds at the end of the year last year and rounded out with much higher AR, I think, than we anticipated. Inventory was a little bit higher as well.

So it meant at close or three days or so before close, the seller was supposed to deliver their estimate of the networking capital. They did and ended up, you know, they were a little bit higher than we anticipated, which in many respects is a good thing. It means the business is doing well.

But it also means based on how we had valued the business and the offer that we had locked and loaded on, we owed some money after close. We had a $50,000 collar. So that just meant anything above or below, anything outside of that $50,000 collar, we needed to true up.

So we went through the process of after close, how to look at what they had provided. Make sure I kind of understood and verified that that was actually the numbers, and it was. And ended up cutting a check to compensate on the networking capital after we were, I think it was 30 days or so after we closed.

And how big was the check? How big was the difference? I guess if it was the networking capital then was more than $50,000 off the peg in their favor. Yeah.