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 my wife and I create $200,000 or more in capital gains inside one year of an acquisition by ‘fixing’ the distressed small business.

By on May 15, 2014

How my wife and I create $200,000 or more in capital gains inside one year of an acquisition by ‘fixing’ the distressed small business.

By: KC Truby

Although everyone has heard of “house flipping” and we all know Warren Buffet buys undervalued businesses. Almost no one knows the same opportunities are there for the pickings in the small business arena. Every year, right in your hometown approximately 20% of the smaller companies fall on hard times. Because so few people see this as an opportunity, the struggling company just fades away.

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You may well be able to get these distressed companies for very little out of pocket cash. In some cases, we only pay ‘walk away’ money so the seller can get out of town, so to speak.

Once my wife and I discovered this concept, the results were so positive that we sold our accounting business to buy failing companies full time. We have done five of these deals in just the last 2 years.

Our first step is to fix the obvious mistakes that the owner does not want to see so we can resell the business in one year for capital gains. Sometimes the companies we get are so good we keep it as a long-term retirement income stream. This concept is the proverbial ‘acres of diamonds’ in your own back yard. These deals are everywhere.

How we increased the value by $200,000.

In today’s small business market, a company will sell for 2.5 to 3 times annual earnings. We sell at 3 times since we install ‘management by checklist’ systems and have a manager in place that stays behind before we put an acquisition back on the market. So we buy cheap, make a few easy fixes, install management systems and sell out large.

To get to $200,000 increased value I need to drop an additional $70,000 to the bottom line or $1,500 per week in new profits. That works out to $70,000 times a multiple of three = $210,000. We hit it.

To get that we look for companies where we can cut 10% of the overhead or more. We look for cost that do not directly contribute to the bottom line. That is usually enough to double the net from any business we are buying. By the way, if we can’t see the easy money, we skip the deal.

Our second task is to contact the top 20 to 40 customers and ask what else we should be doing for them, what we are currently doing that they do not care about and who else they do business with during the time frame they are our customers. This gives us enough ammunition to improve sales around 25% over last year.

Either of these steps may well be enough to increase the value of our acquisition by $200,000. If we do both we are assured we will hit that number.

We can do this on-the-side, with very little cash up front. If you attend the next 2 day seminar you will get our cost cutting check list and the steps we take to rapidly increase sales. Simply click here to learn more about attendance.


 

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. Tim

    June 1, 2014 at 2:36 am

    $200k increase in value from EACH deal you do, that is incredible!

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