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

How To Training

The skills outline for finding – fixing and selling distressed companies.

          The following list of topics represent the content that will be posted on this web site between September 1st and December 31st 2014.

Each article will provide critical answers and become an important piece of your Mergers & Acquisition plan.  To hear when a new article is posted be sure to sign up for our free process download and video’s.  That will automatically put you on our email announcements one to three times a month.  (We don’t believe in filling up your inbox every time someone around here sneezes.)

These articles are 400-500 word oversights of the steps we’ve learned over 45 years in accounting and M&A.  If you want to REALLY learn how to do this and come up with an action plan.  Attend the next workshop where you will sit at the table with others who are doing it, today.   Reading a book is fine but the best way to learn is to ask questions and partner up with entrepreneurs in the market.   This is the kind of strategy that is best learned around the campfire over cigars.

We have found very few success stories from those who ‘read’ about how to do M&A.  All our best stories come from people who were able to ask others and get that ‘gut feeling’ about what works and why.  That is because the real skill is not marketing, finance or management – the real difference between success and mediocrity is human engineering skills.   The ability to know what the seller is going to need and how to help them get that while still making a great deal for yourself.

Why buying a business is the best investment you can make with the least amount of risk.

 

  1. The big picture opportunity of buying & fixing distressed companies
  2. Is buying and selling small companies a get rich quick scheme? Probably, yes.
  3. Why this is the best time in history to buy a business
  4. The ‘roll up’ as a marketing strategy for your business
  5. Want to retire soon? How to create a long term monthly income from acquisitions.
  6. Why even a high school dropout can create income and real wealth in business.
  7. How to become rich owning a business / fast route to creating a net worth
  8. Buying an existing company is easier than doing a startup (back office & overhead)
  9. If you have a hot new product it is easier to launch it from an existing business
  10. Your ROI is much higher in a business then in real estate or other types of investments
  11. What if money is a problem, if you have very little cash in the bank or below average credit?

 

The biggest fears and obstacles we hear about buying, fixing and selling

 

  1. What if I buy a business and the next day sales just seem to disappear
  2. If I buy a business I know little about how will I ever be able to deliver the product
  3. The owner may have a lot of hidden problems they don’t tell me about before the sale
  4. I do not understand business very well and would be lost trying to run a company
  5. The accounting function and legal requirements are beyond my capacity to manage

 

What else you need to know before you start.

 

  1. In biz buying you’re not competing with every HGTV viewer with a hammer & paint brush
  2. How much cash do I need to buy a distressed company – can you get in for no cash?
  3. How much cash do I need to buy a healthy company – can you get in with no cash?
  4. What assets will you really need; cash, hutzpah, a 135 IQ or a rich uncle.
  5. Although banks will not loan you money, it is available from dozens of sources, if needed
  6. You will generate positive cash flow immediately (or don’t do the deal)
  7. How much time will an acquisition take, and do I have to quit my day job?
  8. How to hire a manager to run your business so you’re a part time CEO
  9. Why buying a business is far easier then we think, even a bigger one.
  10. Should you flip your new business for fast cash or keep it for lifetime income
  11. Creating a ‘buyers profile’ why this will save you time in dealing with sellers and brokers
  12. The 3 categories of work that you will need to get done, what do you want to do
  13. Why business fails and how you can prevent the common problems before you start
  14. 2 words that assure your success if you own a business ‘human engineering’
  15. If I go into business – how will I get back out?
  16. Why most companies end with a whimper and a whine
  17. Can you sell out at a high multiple in a short time
  18. Will your employees buy your company
  19. Start developing a list of potential buyers before you even start

Looking for the right business to buy, since starting from scratch is a last resort

  1. Why the ‘hard times’ business is your best acquisition for a nothing down deal
  2. When the ‘hard time’ business is the WORST acquisition you can make
  3. Establishing your search criteria – define the business you want to buy
  4. When to go off your criteria and move on a good deal that fell into your lap
  5. How big of a company, can you buy?
  6. Why 96% of all businesses owners would be better off if you bought them out
  7. I look for good deals, and then once I’m in a category I work to buy the weak competitors
  8. If you are in business now is it wise to focus on what you have or buy another company
  9. The search for the good business (nothing is ever perfect) your search plan
  10. Most companies for sale are never listed with a broker – here is how to find them
  11. Searching through brokers – for a business that is listed and somewhat vetted
  12. Understanding the brokers needs and how to work with them successfully
  13. Why brokers only list 1 out of 4 firms that call in about selling.
  14. How to get the broker to tell you about the other 3 and why you want to know
  15. Searching through accountants for the distressed sale
  16. Searching through business coaches for the distressed sale
  17. Searching through business lawyers for the distressed sale
  18. Using the yellow pages to find roll up prospects
  19. Working with bankers, leasing agents, advertising salesmen and other B2B vendors
  20. Attending SCORE meetings and other business events as a prospecting tool
  21. Creating deal flow, how to have over 100 sources bringing deals back to you
  22. Managing the deal flow / and keeping all the details straight – using CRM software
  23. Qualifying the seller, are they really for sale or just playing –
  24. When to WALK AWAY from a deal. We walk away from 98 out of 100 we look at.  

 

Valuing the business – you don’t pay the asking price, you pay what it is worth to you

  1. The initial contact with a company you want to consider
  2. Valuing the business – most owners are emotionally tied to a number with little fact
  3. Your interview with the owner – questions you need answered before going forward
  4. Can sales be increased dramatically in this business by working existing customers
  5. Financial analysis – you must get the QuickBooks back up, and what to look for.
  6. Due diligence – the 109 questions to look at before you start negotiations
  7. Ratios and comp’s how you will use them to show the owner the real value of the business
  8. If I owned this business, what will happen next year
  9. How difficult is it to increase the number of clients in this business
  10. How do we think we might increase the average ticket or annual sales by customer
  11. Can we get this customer to come back more often
  12. If we had owned this business last year, what would it have made in profit?
  13. What is this business worth to me based on ‘cross marketing’ or off balance sheet assets?
  14. Review the accounting line by line and understand the cost structure including hidden cost
  15. Develop your plan to turn the business around before you buy it
  16. Business appraisers – when should you get a second opinion and who should you hire

 

Buying the business or at least getting control without using your own money 

  1. Why you may not have to even buy the business to get control of it.
  2. Getting a valuation now, and taking 50% of the growth after you take control
  3. The big problem, how to get the current owner to step out of the way
  4. How to ‘tie-up’ a business, take over management and ‘earn out’ your percentage
  5. Negotiating the sales price – when you do buy the healthy business
  6. Negotiating the sales price when you are buying a distressed business
  7. Basics for financing a deal – so that you use as little of your own money as possible
  8. Why you should pay more and pay higher interest if the terms are better.
  9. What ‘working on the lift’ means in your negotiations
  10. Using the ‘earn out’ to reduce your up-front cost
  11. No money down does not mean the owner does not walk away with some cash
  12. 11 quick ways to buy a business with none of your own money
  13. Buying a broke business and negotiating the accounts payable to 20 cents on the dollar
  14. Building your case for the value of the business so the owner agrees to your offer
  15. When to turn to the SBA and why they are a good resource for you
  16. No matter what the owner says, they will carry back a good chunk of the sales price
  17. Using venture capitalist and angle investors – how to get money without giving up control
  18. The purchase agreement and where lawyers come into the picture
  19. Letter of intent and why you need 30 days before you close the deal

 

Roll up your competitors a methodical process

  1. Why the roll up is a 400 year tradition in rapid growth
  2. Your plan to find potential acquisitions
  3. How to approach the targeted companies
  4. The distressed business as your best acquisition for off balance sheet assets
  5. How we buy distressed companies for ‘walk away’ money

 

First two to six months, absorbing the company and turning it profitable by fixing production and finance problems.

 

  1. Never ask ‘how to do something’ ask ‘who will do this?’
  2. Why you will need a manager to run the business and when to hire them?
  3. The five (or 16) mistakes all business owners make and how to fix them
  4. How to take over the business so your customers and staff do not leave
  5. The absorption plan – a daily check list of what you will need to do
  6. Spend the first two weeks listening – then take drastic action
  7. Time is the biggest enemy you have, too much time is what causes cash flow problems
  8. Why a sense of urgency without radical behavior is your best friend
  9. Find out why the past owner did not make the changes that you plan on
  10. You can wait to grow sales, but cut cost and get in the black NOW
  11. Sign every check the first 2 – 5 years and fix wasted expenses
  12. Assigning transition tasks as a way to determine which employees are on your side
  13. Creating accountability systems with daily meetings to review your progress
  14. What is the 80/20 rule in business and how is it going to affect your management
  15. How to determine where you can cut cost immediately by 10 to 20%
  16. Create cash flow scenarios from best to worse case and share them with your staff
  17. What to do with your new company in the first 120 days to double cash flow
  18. Determine your cash needs in the first 120 days – plan on where it is coming from
  19. How to grow the company 25% to 100% a year consistently and profitably
  20. The different business models and which one we personally like best
  21. Have every problem and question brought to your attention –
  22. How to fix or kill the cause of the problems so you never see them again
  23. If possible can you close the facilities and operate virtual or in shared space
  24. The virtual back office set up we use
  25. Overview of measurement systems so you can stay on top of the business operations
  26. How to create system to track sales leads
  27. The best way to track expenses and keep them under control
  28. How we use CRM to track customers and their purchases
  29. What you need in a management team so you don’t have to work full time
  30. Who will run the business you, wife, brother your intern, the assistant manager?
  31. When will you turn over the operation to a manager, whoever that person is?
  32. What do you pay the manager?
  33. Do you allow the manager to earn stock in the company?
  34. Will you eventually allow the manager to own the business with no money down?
  35. Hiring, training and setting up interns to become your future managers
  36. Creating an operations manual on ‘how we do it here’
  37. What sucks up management time – can you just stop doing it
  38. Start your staff on flow-charting how they do important tasks.
  39. The number one question for your team ‘how can it be improved?’
  40. Why up to 50% of the overhead in a business drives little or no profit to the bottom line
  41. How we isolate those expenses and calculate the unseen effect of removing them.
  42. How to killing cost without killing sales or reducing the good leads in your pipeline
  43. What does the company do that works –
  44. Who are the clients and customers that drive the most net
  45. What are those customers really buying that keeps your business growing?
  46. Why you should ride with the best sales person and hear what customers tell them
  47. How to find line extensions from your best sales people
  48. Line extensions from your best customers
  49. The before during and after questions that may lead to future line extensions of JV deals
  50. Look for underutilized assets that can be liquidated
  51. What business out there has a vested interest in your acquisition being a success
  52. Can you bring in joint venture partners who will sell your customers their products
  53. How do you leverage that knowledge into an ally that will help you survive and prosper
  54. How to have these answers in place before you buy the business
  55. Lay out a compensation plan that cuts pay but provides way to make it back (and more)
  56. Outsource every task that is not directly impactful on the customers experience

 

Creating a turnkey business that will generate income for the rest of your life

 

  1. What is a turnkey business and how do I know when I have the one I want
  2. Strategic Planning Before we start building a real business we take 8 steps:
  3. The Strategic Plan and market analysis – What we sell.
  4. Budget and cash flow plan to determine economic viability & 2nd opinion
  5. Explanation of how we created and mange this operations manual

 

Exit strategies

 

  1. The business plan for exit. What are the options for selling or keeping it as a cash cow
  2. Selling out or converting to a long term (no work for you) cash cow annuity
  3. Who will find value in my technology, client base, employees, processes or cash flow
  4. How am I going to romance those people for the 2 years prior to my exit point
  5. What kind of manager do you need in place before you can sell out at a high price
  6. How to make sure we are trending UP in sales the two years before we sell
  7. The management systems that will make a buyer secure in taking over your company
  8. Installing measurement systems that will amaze your buyer and give them confidence
  9. Why your tax returns should tie into your accounting software and bank deposits
  10. Why it is critical that you do not hide income in the two years before you sell
  11. Finding buyers up to a year or more before you are ready to sell.
  12. Finding the financing in order to help you close the deal
  13. Converting your manager into your buyer –
  14. Do you sell for ‘nothing down?’   You can often times sell faster and for more money
  15. The succession strategies that reduce your financial risk in an owner carry finance deal
  16. How to ‘foreclose’ on a previously sold business before it gets into trouble
  17. Why securing your ‘paper’ with other assets will protect you in the ‘nothing down’ sale

 

Tax strategies, asset protection and CEO strategic thinking

  1. The end number – how much is enough? When do you quit.
  2. The difference between capital gains and earned income
  3. Why EVERY business owner needs a detailed asset protection plan in place TODAY
  4. Tax implications of taking your payments over time or in stock if you are merging UP.
  5. Using 1031 exchange to keep rolling up your profits for bigger and bigger deals
  6. Can I transfer my business to my children
  7. How do I structure a transfer to my key manager
  8. Setting up a defined benefits pension as a method for hiding your excess cash flow from creditors, predators and competitors. (Predators of course include the government.)