Well, well, well, it's been 6 or 7 weeks since my last blog post. I was just getting into the details of some companies for sale when I took a little time out for some travel through Germany and England. But I'm back now and I've gone through a bunch of businesses-for-sale listings, crunched some numbers and had about aa dozen calls with their respective owners. I have some good & interesting news for you, but first, let me share some stuff that has not worked out so far.
After a few weeks of looking for businesses I have found several interesting companies (most of them on flippa.com). I added them all to my watch list and started to dig into the provided due diligence material, including financials, customer lists, tech stack, etc. - this was an eye-opening experience.
Right from the start I could tell that not every business owner is really ready to sell their company. Basic stuff like having complete and accurate financial records is not as common as one would think. I don't understand how some people think they can sell a business without and Profit & Loss statements, Balance Sheets and Cash Flow statements. Any business that did not have their financial records in order was an immediate pass from my end - I have no interest in getting into something like this...god knows what can of worms I might be opening.
After the financials, I started looking into the underlying technology for all these companies (all of them are online businesses). While I am certainly quite capable from a tech perspective, I did have quite the learning curve to overcome in the last few weeks. I am glad that my dev team is available to explain things to me and guide me towards a safe & sound tech set up.
After the tech review I typically got on a Zoom call with the owner to discuss a bunch of details, including (but not limited to):
- Does the owner have the business processes documented? Is there a customer service manual available?
- Why is the owner selling? What is the owner looking with regards to deal terms?
- What is this company's unique selling point? Why/how is it better/faster/cheaper/etc. than its competitors?
- Have your financial house in order (including P&L statements, Balance Sheets and Cash Flow statements for all prior periods).
- Document all main business processes (and do it so well that any outsider can pick up your documentation and understand & run that process).
- Provide a list of customers (can be anonymous at the beginning of the due diligence period).
- Compile a list of all customer contracts and recurring subscriptions (ditto for any vendors / future obligations).
As always, I personally read every comment you leave below and appreciate your participation in this strange experiment.