BMach said:

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Principal Uncertainty said:

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I'm a bit confused as to how you think this is going to work out given your criteria of "Owner-operator . . . . Established and profitable, roughly 15 to 75 employees . . . . just me with my own money"

You must have done really well in CRE to stash away about $20MM in 17 years in order to use your own money to buy such a large, successful business. If so, why are you trying get out of such a lucrative career and "buy" another job? If not, then you don't have enough money on hand to buy a company as successful as you described.

Enquiring minds want to know.

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Inquiring minds want to know why you think he needs a minimum of $20mm for this? There are plenty of businesses that fill this criteria for substantially less than $20mm. Also, have you heard of SBA loans?

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aggiez03 said:

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Yeah, I dont really see how the numbers work either, if he has that kinda dough, 'just me and my own money', to buy a $15MM+ business, he would be much better off investing in real estate, something he would know much more about and real estate almost aways appreciates. With a 1031 exchange, he could turn say 3 MM into 5MM in 10 years or less just flipping houses or industrial buildings.

As far as buying an industrial company, I would target much lower company at 5 to 10 employees and avoid a large headache of a larger workforce.

Buy something smaller and build the market through sales calls or vertical integration into adjacent markets.

For example, buy a metal bending fab shop that does commercial AC work, and add a laser where you can fab SS parts, or build industrial cabinets or buildings even.

I have a vendor that bought a several 100k laser for his metal building fab company and ended up paying for his laser with all the oil field parts he could then make.
He never even considered tgat revenue stream when buying the laser, it just organically happened.

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Principal Uncertainty said:

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I'm a bit confused as to how you think this is going to work out given your criteria of "Owner-operator . . . . Established and profitable, roughly 15 to 75 employees . . . . just me with my own money"

You must have done really well in CRE to stash away about $20MM in 17 years in order to use your own money to buy such a large, successful business. If so, why are you trying get out of such a lucrative career and "buy" another job? If not, then you don't have enough money on hand to buy a company as successful as you described.

Enquiring minds want to know.

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Diggity said:

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80/20 rule like everything else.

There's a ton of CRE folks that aren't doing much of anything right now. Industrial is a good place to be but it's all about your contacts.

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Black Tooth Grin said:

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I am also confused.

The post made it sound like he has cash on hand. So I can understand why some would think that. Even with SBA, the buyer would most likely need 10 to 20%. At a 5-10MM price tag, the amount of disposable cash required for the buyer portion is $1MM.

The other confusing thing is the industry switch. It is tough enough to run a business, but to transition to a business without the background experience will be an additional challenge.

Just my 2 cents.

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Ducks4brkfast said:

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aggiez03 said:

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Yeah, I dont really see how the numbers work either, if he has that kinda dough, 'just me and my own money', to buy a $15MM+ business, he would be much better off investing in real estate, something he would know much more about and real estate almost aways appreciates. With a 1031 exchange, he could turn say 3 MM into 5MM in 10 years or less just flipping houses or industrial buildings.

As far as buying an industrial company, I would target much lower company at 5 to 10 employees and avoid a large headache of a larger workforce.

Buy something smaller and build the market through sales calls or vertical integration into adjacent markets.

For example, buy a metal bending fab shop that does commercial AC work, and add a laser where you can fab SS parts, or build industrial cabinets or buildings even.

I have a vendor that bought a several 100k laser for his metal building fab company and ended up paying for his laser with all the oil field parts he could then make.
He never even considered tgat revenue stream when buying the laser, it just organically happened.

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Agree with this. I have 70 employees and it is not something you just step into.

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Proposition Joe said:

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He may just want to try his hand at something new. Just as an example, there's a lot of stories of high finance guys making millions a year that decided one day to just do something else. For some it's stress, for some it's simply being tired of an industry.

Sure, money often facilitates happiness - but some are in a position financially where learning or experiencing a new industry is a freedom they now have.

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Ducks4brkfast said:

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This might sound weird, but I think managing 11,000 people would be easier than managing 70.

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aggiez03 said:

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Not to beat a dead horse, and maybe a $2MM company with 50 employees exists, but...

50 employees $12 /hr x 40 hr week x 52 weeks = $1.25MM payroll

Raise that to $20 per hour, and payroll is over $2MM alone

I doubt any company averages even $20 per hour across the board once you figure in mgmt, accounting, sales, etc making $60-200k+

That is not including benefits, biz GL insurance, retirement, expenses, rent, electricity, etc.

I don't see how a 5MM company could afford $2MM in payroll (and numbers above are at 50 employees) unless running 100% margin on sales. COGS probably 40% or more for most businesses.

Would love to see how the numbers work, but obviously none of my business.

Good luck and I will keep my eyes open for anyone interested

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