How to Buy a $20m Business as a First-Timer

I just felt like it should be based on, you know, the last 12 months of revenue, not last year's revenue. And forget about the most recent six months, that didn't make any sense. And so when I insisted on that, the one of the sellers, he just got really upset about it.

He felt insistent that his business was a $10 million business and we were actually slated to Meet for a lunch and he pulled out the day before. And when he got so emotional like that and, you know, wouldn't even sit down and talk, I was like, I don't trust this person as a negotiating partner. So I just lost faith in the deal.

I think it's entitled Kill It Early. Red Flags. How to spot red flags before engaging in diligence. And it's all about this.

What can. Before you spend thousands of dollars on a Q of E, what are some soft signals that you can identify with your other party or the target business that should scare you off and tell you you don't even need to proceed? This is just a perfect example of that.

You know, one of, you know, in my research and like, from listening to interviews and reading and everything, that one of the things that really stuck for me was that deals that don't work, the number one thing is the relationship between the buyer and the seller. And I really wanted to find. So the entity I formed when I was, when I launched my search was called Legacy Bridge Capital.

And I was really focused on the idea of like wanting to carry somebody's legacy forward and really wanted to find sellers that, that I resonated with and that, you know, I really would be proud to carry their legacy forward. And the idea of going through with a deal, given how I felt about it with someone that I didn't have a good feeling about, just seemed not right to me.

A non starter.

Yeah, exactly.

Okay, Allan. And so how do you find the business that you do buy?

So the interesting thing was that deal for the, the value added reseller that fell through that was represented by a local boutique investment bank called Quasar here in Minneapolis. And through that process, I established a good relationship with them. Even though the deal ended up falling through, I developed a lot of trust in, in them.

And I think they got to see evidence that I was a serious buyer and we just had a good relationship. And so when a couple months after that deal fell through, they tried to revive it. And when I said I wasn't interested, they had another company that they, they suggested I take a look at and it ended up being the company that I bought.