Acquisition #4

It seems like just yesterday I told my mom we were maybe looking at buying a business and she looked at me like I was crazy and said “ya right, who is going to loan you the money for that?”

Little did she know, it’s really not that hard to jump through the hoops that banks want you to and seller’s with small companies and no assets are eager to seller finance huge chunks of money to be able to retire.

This little gem came across my desk in a very literal way. In June, I took a routine phone call in the office and sold a customer our general service plan. As always, I asked how she had found us. She said the company she used went out of business.

Naturally, I asked who that was and finished the call. I immediately dialed the number of the “closed business” with hoped we could buy the google page, website, and customer list for a few thousand dollars. The phone went to voicemail but the voicemail said to call a different number. I followed the trail and called the mystery number and what do you know? Toni answered!

Toni is a frail 81 year old woman hanging on for dear life. She did not want to keep running the company but she had nobody to pass it to. Her son was the only technician and if he took over, she would still have to answer the phones.

She didn’t know her revenue, SDE, number of customers, or really anything at all. All she could tell me was she had 3 old Ford Rangers and they were all white.

We took a 4 hour drive a month later down to Canon City, CO to investigate. An income statement could not be produced, nor could she find a tax return. She had 27 years worth of paper tickets and sure enough, three white Ford Rangers.

I looked over a couple months of chicken scratch work orders and estimated she did about $10k a month of revenue for a few months in the summer and the winter would be half that.

We offered her $80k. $25k down, $55k seller financed or two years with no interest. She accepted.

We said we would be back in two weeks to sign a contract and take over. Over the next two weeks her CPA and financial advisor advised her to not carry a seller note due to her age.

We told her there was far too much risk here for us to pay cash and a bank wouldn’t finance it without a shred of documentation or financial history. We kept in touch but figured by Spring the business would just be shut down and our door to door crew would come through and clean things up.

In November, we sent out a box of chocolates to some of our biggest customers, local competitors that we work with and decided to ship one her way.

The day she got it she called. She said please come and take over for me. I am DONE!

So, we hopped in the truck that weekend and went down to meet her. Since June, her husband who had been bed ridden with dementia had passed away, she blew an engine in the nicest Ranger she had, and her son had up and left to Texas. She stopped answering the phone and had thrown in the towel.

We chatted about the state of the business and revised the offer to $61k. She gladly accepted. Notary showed up the next day and we made it official.

As we combed through records, emails, and work history, we came across her tax returns. The business had done a whopping average of $230,000 in revenue for the prior three years. Unfortunately, she had lost money each year but we have better systems built out and figured we could squeeze 20% margins out of that year one in a worst case scenario situation with no price increases and no additional customers added.

We would have our money back before the end of year one. Since then, it’s been a pretty easy ride. We hired a rockstar technician to service Canon City and Pueblo and everybody loves him. He is driven and motivated and said he is going to get so many sales in his hometown that we won’t be able to send him out of town anymore. I love it.

Toni is happy to finally be retired and have a few extra bucks in the bank. We already sold the Rangers and got most of our down payment back.

This deal was not just a home run. It was a grand slam.

A lot of internet gurus will tell you to work ON the business and not IN the business. Had I been tucked away in some corner office looking at excel models and other “higher level” stuff, I would have completely missed this deal and the 6-7 figures this will make me between cashflow and exit over the coming decade.

My advice is do the nitty gritty stuff. Be a part of your business. It’s cool and fun.

Ciao.

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