Well, maybe not a road trip.
As some readers know, I use an airplane in my business broker / mergers
and acquisitions business and use it when I can to visit business owners that
may wish to sell their businesses and also to arrange visits between business
buyers and sellers. I apologize in
advance for this blog entry – I write as much about flying as about the visits
on these “trip reports”.
In this case a business broker in the
and he wanted some help in assisting them.
We arranged to meet, and the morning of the meeting I awoke to raining
skies – not a good sign when I’m planning to fly somewhere. But it was a weak storm and it looked like I
could make it safely. I preflighted my
plane and flew over to
to pick up another partner, Craig.
Craig’s airport was under a dense carpet of clouds almost down to the
ground making it impossible or at least very dangerous to land, so we called
Craig on his cell phone and said, “have a nice day” and then we continued
flying. I did an instrument approach into
in low visibility weather but no rain.
We met the business broker at the airport and he drove us to the meeting.
The business owner is a very impressive, young guy who has
done a fantastic job of building his specialty produce company. I wish I could describe it in more detail but I can not without breaching confidentiality. He started as a produce broker and figured
out how to produce some specialty products.
A large merchant like Walmart picked it up and he spent a few years
providing exemplary service to this large chain – and it continues to pay off. Fortunately for him the grocery business is
fairly recession proof as people tend to stay home more vs. going out to
He makes around $2 million each year in earnings, but is
getting burned out. He has a passion for
a hobby that he can’t fully participate in, and just plain wants to do
something else. That is a pretty typical
reason for selling – burn out – although sometimes that doesn’t play well with
buyers. They just can’t believe someone
would burn out, and think there must be some sinister reason for selling (of
course, sometimes there is that too).
This type of business is prime for a private equity group
(PEG). These are groups of professional
investors that will buy small companies and grow them, hoping themselves to
sell them to a larger company later (or go public, but not so much any
more). They will buy the entire company,
or sometimes just a piece. One thing
they require is a healthy profit margin, and most of them will not even
consider a company unless it is throwing off $1 million in revenue. Ask me how I know that. It is surprising how many there are out too –
the leading database is probably www.privateequityinfo.com
and they claim many thousands of firms, although I happen to know a lot of
those are not active.