How to buy and turn around a
distressed business or 'roll-up' competitors

On this site you’ll read real life stories of how 23 entrepreneurs find, fix and then sell small companies on the edge of failure. Sometimes we buy our weak competitors in a roll-up and get new clients cheaper by acquisition then organic growth. If you like these concepts, come to the next workshop. Learn how we...

✓  Find distressed companies that are worth saving for capital gains
✓  "Roll-up" your competitors for rapid growth with little cash or risk  
✓  Why buying a distressed business is the BEST way to do a start up

From KC Truby Lonesome Cowboy Publishing Inc. 301 Thelma Drive #426, Casper WY 82609 (760) 207-6385

4 steps to finding a distressed business for sale – on the Internet

By on July 6, 2014
distressed business for sale

4 steps to finding a distressed business for sale – on the Internet

 

Over the past few years we’ve bought a half dozen companies with less than $5,000 of out of pocket money. Even the worse deal worked out because we got 3 new clients for less than it would have cost in advertising and sales commissions – to bring them in.

 

The most common question asked by people who hear that is…“How do you find distressed businesses for sale?” Well of course we get a lot of leads from our referral sources. But the majority come from searching the Internet.

 

FIRST THING TO NOTE, we do not buy distressed companies ONLY. Most of our distressed business buying is in the ‘roll up’ category where we are already in the space and looking for weak competitors to take the customer list and employee roster for walk away cash. We then convert those ‘off balance sheet assets into our assets where we can absorb the revenue and cost easily.

 

However we do occasionally buy companies in a new category that are ready to fail, but we must see some characteristics in the business or it is not worth the effort. The most important is sales. If the company were looking at is not doing at least $1,000,000 in annual sales – we generally walk away. The reason is that some companies should have never been started in the first place.   There might be a darn good reason the operation is another distressed business for sale, no one wants their product.

 

For this article we are going to review the steps we take to find ‘deals’ on the Internet.

 

  1. I search the new listings on all the web sites under the Google term ‘business for sale (town)’ Now what I’m really looking for are those companies that are not listed with a broker. If the company is really for sale, the owner has probably been turned down by a broker who did not want the listing.   Brokers turn down around 70% of the listings they look at because the company for sale is not solid.
  2. We look in Craigslist.org once a week under the For Sale / Business category. Only about 5% of the listings are for a business sale, so you’ll have to do some sorting here. Since it does not require a payment to get listed, it is the first place distressed owners seem to want to post their company.
  3. Now the next one is a little tougher. In most counties there is a local service that gathers bad news at the court house. This can fall into the category of tax liens, judgments or law suits. Bad news means opportunity for us.   The Crain’s business newspapers (if they publish in your town) often research and publish this data weekly.
  4. The toughest and most exotic idea of all. Back to the court house, but this time we are looking for deaths and divorce. Especially divorce. Divorce causes chaos in small companies.   Here is how to find your prospects.   Get a list of names each week for divorce filings. Then check those names against the secretary of state’s corporation listings online and Google.   You’ll probably find that one out of ten divorces have business properties that are going to need valuations or liquidations.

These 4 steps are just simply ‘leg work’ that you can hire a college kid to do a few hours a day.   I would feel comfortable paying $10.00 an hour with a minimum performance of 5 prospective deals or leads per hour.   Simply mail the ‘targets’ a simple letter and ask for a phone call if they would like to talk to you.

 

 

About KC Truby

From their ranch in Wyoming, KC and his wife Linnea have bought or started 21 companies as a side line to their accounting business leading them into M&A as a full time business in 2012. These companies are located all over the Western Rocky Mountains, London and India. Since 1969 through their accounting and training companies, KC has taught 18,000 business owners how to improve cash flow and find more customers by installing standardized systems in their small business. Since 1989 KC has presented over 1,000 seminars and training classes to the small business owner.

One Comment

  1. Cathy A

    July 8, 2014 at 2:12 pm

    Great information and I will just print this out and give it to my “helper” with some additional information….and away we go…. lol.

    Actually, I should know better. I will cut and paste this article into Word, add my few touches and hand it off, PLUS put it into my “Big Book”. See? I am learning from you!

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