Small business forum: Buying the business you work for

Hi Scott,

I know you posted this some time ago but I was curious if you ever purchased the business from your employer. I am going through a very similar aquisition myself at current. I work as the CFO as an agency that my aunt and uncle have owned and operated since 1974, My wife and I work there together and are taking over July of 2013. I wanted to see if you did in fact move forward if you have any advice you could provide. If you did not move forward and are still contemplating the idea, I wanted to share will you some of the tactics my wife and I used in our negotiations. It was not pretty, especially since there was family involved. It basically got to the point where my wife and I tendered our resignations because my aunt and uncle did not wish to provide us with what we were looking for only for them to come back the next day to let us know that they did some 'soul searching' and think they figured out a way to make it work... LOL.. You must be able to walk to the edge and ultimately jump off if you are really serious about aquiring a business that you work for because if you do not get what you want you really do need to be 100% ready to walk if need be. Please fee free to contact me either by email; jeremy@actionbail.com or by phone @ 954-815-4555 to further dicsuss this matter. I look forward to hearing from you. Have a great night!

Jeremy Wolf
CFO
Action Immigration Bonds & Insurance Services Inc.

Hi,


In order to value the business, I suggest to create a simple model (at first) thinking about the economics of the business rather than from an accounting point of view. If it still look attractive then one can move on to a more complex model analysis if necessary. This article explains a framework to put together a high level analysis of the business. I believe the thought process might be helpful to get started with the assessment and consequently planning the transition http://www.voksebiz.com/business-plans-blog/2011/9/20/how-to-start-your-business-plan.html
In terms of competition, even though the business might not have direct competitors, there might be some indirect competition that might be good to look at.

In order to gather some benchmarks, looking at 10-k's of publicly traded companies might be help. This can give an idea of valuation (for example, looking at ratios between earnings vs. market value). A good source for this is http://www.sec.gov/edgar.shtml

Yes, I agree, it is important to determine what debt is personal and what is of the business. The legal status and structure of the business is another key point.

I would also read as many web articles as possible on the subject of buying a business, books at B&N & maybe approach the local library. http://www.score.org/ advisors might be able to help depending on your location.

There's a lot of points to consider, so a helpful thing to have is a To Do list with all the key aspects.

Good luck!!!