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Offer to buy.

10 fingers

Hot Rolled
Joined
Mar 9, 2003
Location
Vermont
A few years ago made a similar post with no decision being made.

Within past 3 months have received 2, cold calls from "agents" representing capitol investment firms seeking to negotiate purchase of my company. The caller is unable to detail anything about our market other than what was gleamed off our web site. Smells of a scam. But, am at a loss to appreciate what angle they're working. Am interested in hearing from other shop owners that have also been solicited.

So far have responded with, company is debt free, making record profits and turning away millions in quote requests. (True situation.) That selling is not a consideration at the present time.

Please, no replies from other than shop owners.
 

Garwood

Diamond
Joined
Oct 10, 2009
Location
Oregon
I have not heard of any scams like this.

A good friend of mine has a business that was doing very well as you describe. He refused to entertain selling to his deep pocketed competitors when times were good. When the situation changed and he was interested in selling there were no offers of coarse.
 

Mud

Diamond
Joined
May 20, 2002
Location
South Central PA
It's not a scam. It's a business broker trying to get you on the hook as a client with a business he can sell. Much like a realtor soliciting you to use him to sell your house that you haven't yet said is for sale, he wants to get you to sign a contract that entitles him to a percentage of what you get for the business in the next few years. He'll approach you with promise of many potential buyers in his pocket for "A business just like yours", then once you are landed he'll start looking for those buyers and try to get you together so he can collect.

I've had this by mail and by telephone cold call several times a year, for the past 25-30 years. More in fat times, fewer in lean times.
If you DO want to sell, pick your own broker, not one of those cold callers. Once you talk to a real one you'll see how this works. So not really a scam, but not much better.
 

10 fingers

Hot Rolled
Joined
Mar 9, 2003
Location
Vermont
Mud, sincere thanks for the insight. Sort of what I suspected. Except in one case the potential buyer was identified. Doing some homework saw no connection to my firm and their portfolio. In conversation the broker claimed mgmt experience of a majority partner would yield rapid growth. No shit, able to manage over 30 gear machines into full production in a non existent labor pool. That's trick I'd like to see.

Have become hardened over the years to trust little or nothing with brokers and agents. Now work closely with an attorney to review and generate contracts. Cheapest money I ever spent. -Don
 

Kalispel

Aluminum
Joined
Jan 27, 2021
Location
Ohio
Brokers

I have worked with brokers on both sides - buying and selling.

Most are the equivalent of a commercial real estate agent. Some can give decent advice on valuation and deal structure. Most are not highly qualified.

Buyers agents are paid by people wanting to buy a specific type of business, usually in a specific location. The agent runs a marketing campaign to solicit companies fitting the buyer’s criteria. For example, metal fabrication companies within 150 miles of Pittsburgh. They will gin up a list of companies fitting the criteria and use a telemarketer to make first contact. The broker will then personally call anyone who showed the slightest interest. Sometimes the buyer even has a specific list of companies they are interested in.

Sellers agents need a portfolio of companies to sell. Sales take time so they need an inventory to work off of. They run similar campaigns to find clients.

My advice is find out if the broker is working on behalf of a buyer and listen closely if they are. Buyers use these brokers to remain anonymous (for lots of obvious reasons). These buyers are typically serious, there is probably a solid deal to be made and it can happen quickly.

Run like Hell if they are a seller’s agent. They will almost always try to lock you in an onerous contract and you will wait on ice until they get around to maybe finding a buyer. Since they do not know you or the market, they will peddle your business to everyone and you will be left sorting out lots of halfhearted or crazy offers.

If you want to sell, get an advisor of your choosing and take your time to prepare for a sale.
 

PeteM

Diamond
Joined
Jan 15, 2002
Location
West Coast, USA
One pretty-much-a-scam is brokers that will lock up your property for some fixed price, with payment due upon closing (. . . . at some unspecified time in the future). Then they go looking for a buyer at some higher price. Meanwhile, perhaps years in the making, you can't sell your own property. Costs the broker nothing to hold the property - you're paying the taxes etc. Costs them nothing or some pittance of earnest money if a buyer never materializes.

All in the fine print.
 

barbter

Diamond
Joined
Oct 27, 2007
Location
On Tour...
10 years ago I had a cold call from someone interested in "buying" my business.
Although he knew nothing about it....anyway, I passed very quickly.

Roll forwards 6 months....he "bought" a competitor 5 miles up the road.
He had the original owner stay on for 12 months as part of the contract, and the deal was to pay the original owner in 12 (monthly) installments over the next 12 months.
Day 1 he set up a maximum business overdraft and created invoice discount financing (so the bank made 5% on all invoices but he could immediately draw 90% on invoice, and 5% at day 30).
He also withdrew all working cash from the healthy account and re-financed everything for maximum money, and then withdrew that too.

He immediately ordered as much material for all future PO's he could. And never paid for any of it. This kept him going for 8+ months.
He paid the original owner his first monthly check.
Then month 2 was 2 weeks late. Then month 3 was later still. By around month 7, I believe he had only received 4 payments.
New owner had to pay treatments houses for them to release product, so he could then collect, deliver to the customers, then invoice.
At month 7 he had a meeting with main customer, who authorised all outstanding invoices to be immediately paid, which then gave him another lump sum into the account which never went to the treatments houses, because he withdrew that from the bank too!
After that, no one ever saw him again.
And we reckon he got away with around £1 million. For 8ish months "work".
While the original owner (really nice guy that I'd known since he started up in early 90's), came out with not a lot and a bankrupt company.

3 months later, the crook had "bought" another company 80 miles away.
My customer was so pissed, he phoned the company and told the old owner who was there on a 12 month contract :rolleyes5:, everything.
And the guy never believed him.
A year later, that company was having an auction....

IF, any of you owners want to sell up, and you get offers, if it's upfront money all in one go hoorah (exceptionally rare).
Best case, is you get the momney for the business, and then work for 12 months on a monthly paid contract.
But if new man wants you on a pay-per-month, have written into the contract one thing....

If new man misses 1x payment to you, the whole business in FULL (name, financials, money owed, building, machinery, cars, WIP and order book etc) reverts to you in full.
 

Daniel Wheeler

Plastic
Joined
Jan 5, 2021
Searchers, fundless sponsors, independent sponsors...

A few years ago made a similar post with no decision being made.

Within past 3 months have received 2, cold calls from "agents" representing capitol investment firms seeking to negotiate purchase of my company. The caller is unable to detail anything about our market other than what was gleamed off our web site. Smells of a scam. But, am at a loss to appreciate what angle they're working. Am interested in hearing from other shop owners that have also been solicited.

So far have responded with, company is debt free, making record profits and turning away millions in quote requests. (True situation.) That selling is not a consideration at the present time.

Please, no replies from other than shop owners.


M&A activity is burning up.

Brokers don’t really care about the nitty gritty of your business that much unless it’s an industry specific sell side shop.

There is an entire segment of searchers, fundless sponsors, and the like chasing deals at all points of the LMM segment.

Then you have shop owners like me who are actively hunting for more parallel businesses to acquire as add ons or additional business units.

Chances are if you have a real business with more or less stable revenue, you can throw a rock and hit 10 brokers that will line up to sell it for you.
 

gustafson

Diamond
Joined
Sep 4, 2002
Location
People's Republic
Why are you answering the phone?

Seriously, anyone who, first does not ask for me by name[business owner, person in charge of blah de blah]
'click'

I get lots of calls that I have no idea what they are about

'click'

New business?

They say 'Hello, my name is x, from y corp, and we got your number from z'
 

CITIZEN F16

Titanium
Joined
May 2, 2021
I get unsolicited calls here and there for the same thing. I never pick up, but they leave messages. Pretty sure most like callers aren't selective in who they call. I doubt anyone would want to buy a one man job shop, without a product line. They most likely are parasites or scammers.
 








 
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