Author Topic: Small Family Business in Canada (Trying to Buy It Out)  (Read 3378 times)

valueinvestor

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Small Family Business in Canada (Trying to Buy It Out)
« on: January 26, 2019, 11:14:11 AM »
Hi Everyone!

I'm trying to buy out a business for myself, but it seems that it may be pushed 6 months down the line, as I don't have the money.

I work for the business and the owner wants to retire badly that he is willing to sell the business to me for 4X EBITDA with VTB. It's in a very niche market, where only two players including us with a majority share.

To give you a sense, a competitor (largest in our space) that is more than 100x our size and generates $100M+USD in revenues per year tried to come into the market and failed. Additionally, they've attempted to do a joint venture with our company but was acquired by a Private Equity Group, before it could be solidified. Also, a competitor offered $4M CAD but requires the owner to stay on for another 5 years.

At the moment the sale price is $1.5M based in Toronto with a commercial facility worth $500K and assets worth another $1-2M. My plan so far is to earn the money and buy it out-right with an acquisition loan. I'm sure I'll be able to obtain 375K for the downpayment sometime in the next six months to a year, by working and doing various side projects.

However, I am open to any idea to shorten that timeframe. Does anyone know a better way? 


LC

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #1 on: January 26, 2019, 11:57:45 AM »
Anything you can take out loans against? Margin your stocks, mortgage, etc. etc.
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valueinvestor

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #2 on: January 26, 2019, 12:12:24 PM »
Anything you can take out loans against? Margin your stocks, mortgage, etc. etc.

I do not have a lot of assets, and I got out of school recently (so student debt), but I was going to cash my stocks to purchase it.


John Hjorth

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #3 on: January 26, 2019, 12:41:39 PM »
... with 4X EBITDA with VTB. ...

valueinvestor,

What do you mean with "VTB" here?
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valueinvestor

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #4 on: January 26, 2019, 01:32:20 PM »
... with 4X EBITDA with VTB. ...

valueinvestor,

What do you mean with "VTB" here?

Vendor Take-Back is a financing provided by the seller to the buyer to complete a transaction, when buyer is short of funds to purchase or seller wants to profit more by obtaining a bond-like investment. Not a formal definition, but hopefully provides some clarity.

John Hjorth

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #5 on: January 26, 2019, 01:39:51 PM »
Thanks for the elaboration here, valueinvestor,

-To me, especially the Canadian investors here on CoBF throw around themselves with abbreviations, short of explanations [,please let it go here].

Please keep us updated in this topic about your fare - it's actually very interesting [ : - ) ].
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

valueinvestor

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #6 on: January 26, 2019, 02:01:25 PM »
Thanks for the elaboration here, valueinvestor,

-To me, especially the Canadian investors here on CoBF throw around themselves with abbreviations, short of explanations [,please let it go here].

Please keep us updated in this topic about your fare - it's actually very interesting [ : - ) ].

For sure! I'll keep you updated.  ;D

alpha

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #7 on: January 26, 2019, 08:16:49 PM »
What is the "commercial facility" does that mean the business owns the building it operates out of?

wachtwoord

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #8 on: January 27, 2019, 03:28:47 AM »
Not my favourite suggestion but have you thought about asking friends and family (for a loan, co-ownership or for guaranteeing a bank loan)? Cause it sounds like you need a favour.

Good luck! :)
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HowMuchValue

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #9 on: January 27, 2019, 06:45:03 AM »
Are there any other employees that might also be interested? Maybe you could do a majority stake and have minority stakes for your employee partners. It might also help with retaining them and keeping them more incentivized to help the business succeed.