Yep. Well, so as the size of it became more clear and talking with the banker friends that I made, Right. I was really saying, hey, is there some way I can get there? Right. You've got my portfolio and what would I need to do?
Acquiring Minds
From Software to Concrete Cutting (and $1.4m of SDE)
Excerpts · 392 segments · ~1:38:00 long
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I was really fearing I'm going to have to put every last nickel into buying this business. And one of them said, well, have you thought about a Robs? And I hadn't heard about a Robs.
Didn't know what that was. Right. But the rollover for Business Start can be applied to acquisition and they put me in touch with somebody that does that type of business.
Tom, pause real quick to define rob for the audience. It's tapping your 401k tax without being, without incurring the tax penalty to move that capital into a business. Acquisition Robs allows for that.
It's quite technical and cumbersome. So there are third party vendors who manage the process for you. Go ahead.
Yes, thank you. Yeah, it's what it did for me. As I looked into it then, I was looking at this 2 to $3 million cap and the business I could buy based on my liquidity. But if I turned to my 401k and did an investment from there as well, that really opened it up where this was.
I knew this was going to go for, you know, $6 million, five and a half at least. The buyer was asking for seven or eight. You know, I had no chance of getting there personally if I didn't use my 401k.
So it brings in another level of risk, as you mentioned, Complexity. Right. So SBA process already has some complexity. Now you have a Robs with an sba.
Right. I Had to be very sure that this was the business I wanted and that this was going to be successful. This was really my kind of burn the ships moment. Like if we, if we go forward with this, this has got to work.
Right. So it put a little more pressure on me, but it also opened me up to get out of the normal target area of a lot of ETA searchers. Right. So I was very, very fortunate also that the, the sellers did not want to go to sale publicly. So they had just reached out.
This broker was, was reaching out to people he knew, bankers he knew, looking for investors, but wasn't able to list it on biz by sell. Right. Or through a local brokerage. So I knew I had their attention.
If I approached them in a very limited capacity, they aren't going to have 20 people reaching out to the broker, which is really what I needed as a first time buyer. I know I'm going to be slow through this process or slower compared to a seasoned investor.
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