Yeah, it definitely has. I'm surprised how long, but yes.
Acquiring Minds
From Software to Concrete Cutting (and $1.4m of SDE)
Excerpts · 392 segments · ~1:38:00 long
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Okay, Tom. Great. So let's return now to the deal structure.
Sure. So knowing I was working with the limit on the 5 million and I had some funds from 401k but I wanted to limit my exposure there as well. Right. I still was talking to them about a seller's note. You know, I've got to get my bank note down to 5 million, but the sale price we agreed on was 6.
So rather than take a half million out of my pocket and a half million for my 401k, I was trying to find a way to reduce that on my end. Right. So it really came down to they, they had a hard. No. I tried again at a seller's note and that was a hard no.
So at that point I pivoted and said, well, let's do a consulting agreement instead. Right. So outside of the, outside of the purchase agreement, we would have a consulting agreement on the side that would have.
Similar, of similar size to close the gap.
Now that, yes, actually, I think I, yeah, I, I tried to make it very similar for them. I think for them as I went through the process and kind of read what they were thinking, that 6 million was a magic number for them. Right. So I have to get there.
Walker says this in the, in the book. Right. If you're really stuck on a number, I can get there as long as I have all the time in the world to pay that. Right. So what are the things I can control and change on my end to try and get you there if you're stuck on that number?
So they didn't like a seller's note and we said, all right, what about a consulting agreement? So I took a different tact to try and get there the same way. I still had to put in a significant chunk, you know, over 10% myself, between my 401k and personal funds.
So I shifted 400,000 out of my 401k and I put in another, almost 200,000 out of my investment dollars. Right. My liquidity. When you do this with a robs, you have to form a C corporation. Right. So my C Corporation is owned 70% by my 401k and 30% by my wife and I.
Right. So that's, that was structure I just had to deal with if I, if I needed to go the rob's route. I knew I had to go the rob's route to get to a deal this size. Right. I felt like throughout this process I kind of got pushed into where I had to be.
But those things I'm willing to deal with, right. The double taxation people are worried about with the C corp. There's ways for me to work around that.
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