Author Topic: Small Family Business in Canada (Trying to Buy It Out)  (Read 3883 times)

netnet

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #20 on: January 30, 2019, 02:13:53 PM »
We sometimes invest in this space.

there is a whole community of so-called ETA folks-Entrepreneurship through Acquisition.  There a a number of lenders in the US, and I suspect there are a number in Canada as well.

There was a conference at Harvard Business School last month that would have been interesting.  I think there is one at U of Chicago.

There is a small but very supportive community active in the space.

DM me


JayGatsby

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #21 on: January 30, 2019, 02:19:37 PM »
In the US we have SBA loans, which are basically government guaranteed loans explicitly for stuff like this. They require a personal guarantee, but otherwise are great loans... high LTV, no covenants. Not sure if Canada has something similar.

Also could try talking to the owner about seller financing. Sometimes this can be the best of both. If the owner knows you he/she may be fairly comfortable with the busines in your hands. So the owner gets to sell the business, while earning interest on the seller financing.

Finding a good operator of a good small business at a good price is a unicorn. If your resume is good and you set about raising equity you should be able to do it fairly easily (sounds like people on this board have already filled the bucket!). Make sure the incentives are aligned for everyone, but don't sell out too cheap. Don't give up control. Also, know your investor's styles. A lot of PE investors like to "talk strategy" and build forecasts, but not do any actual work. If you're grinding it out at a small business while someone else wants to call and talk to you about what you're doing it can get fairly tiring (talking from experience lol).
« Last Edit: January 30, 2019, 02:23:37 PM by JayGatsby »

valueinvestor

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #22 on: January 30, 2019, 02:47:16 PM »
We sometimes invest in this space.

there is a whole community of so-called ETA folks-Entrepreneurship through Acquisition.  There a a number of lenders in the US, and I suspect there are a number in Canada as well.

There was a conference at Harvard Business School last month that would have been interesting.  I think there is one at U of Chicago.

There is a small but very supportive community active in the space.

DM me

Sure, I'll DM you! Thank you!

In the US we have SBA loans, which are basically government guaranteed loans explicitly for stuff like this. They require a personal guarantee, but otherwise are great loans... high LTV, no covenants. Not sure if Canada has something similar.

Also could try talking to the owner about seller financing. Sometimes this can be the best of both. If the owner knows you he/she may be fairly comfortable with the busines in your hands. So the owner gets to sell the business, while earning interest on the seller financing.

Finding a good operator of a good small business at a good price is a unicorn. If your resume is good and you set about raising equity you should be able to do it fairly easily (sounds like people on this board have already filled the bucket!). Make sure the incentives are aligned for everyone, but don't sell out too cheap. Don't give up control. Also, know your investor's styles. A lot of PE investors like to "talk strategy" and build forecasts, but not do any actual work. If you're grinding it out at a small business while someone else wants to call and talk to you about what you're doing it can get fairly tiring (talking from experience lol).

We do have them here, if not similar. I'm just saving up the 25% downpayment required for such SBA loans.

I know what you mean, or atleast forsee it. I rather be working on the business as the sole owner, as opposed to holding hands.

StockDuck13

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #23 on: January 30, 2019, 05:25:28 PM »
There are search funds that do this sort of thing, that's one aspect of entrepreneurship through acquisition (ETA) and there's a site called searchfunder.com which acts like an online community for the space.

I actually run a podcast on this micro private equity space because I find it so interesting. A lot of these deals include seller financing so as to give the owner some incentive to show you the ropes for the first year. The rest comes from SBA type loans and investors.
Portland, OR

JayGatsby

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #24 on: January 30, 2019, 09:05:46 PM »
I actually run a podcast on this micro private equity space because I find it so interesting. A lot of these deals include seller financing so as to give the owner some incentive to show you the ropes for the first year. The rest comes from SBA type loans and investors.
What's the name of the podcast? I'd take a listen.

In the US I think the seller financing can stack on top of the SBA loan (maybe up to a certain percent?), I'm not sure if you can do a totally no equity deal. It definitely keeps the seller's interests aligned with the buyer.

StockDuck13

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #25 on: January 31, 2019, 08:53:55 AM »
I actually run a podcast on this micro private equity space because I find it so interesting. A lot of these deals include seller financing so as to give the owner some incentive to show you the ropes for the first year. The rest comes from SBA type loans and investors.
What's the name of the podcast? I'd take a listen.

In the US I think the seller financing can stack on top of the SBA loan (maybe up to a certain percent?), I'm not sure if you can do a totally no equity deal. It definitely keeps the seller's interests aligned with the buyer.
It's called Think Like an Owner and my site is thinklikeowners.com. I'm releasing the next episode tomorrow, it's an interview with that Searchfunder.com team and we go over search funds and their evolution, super interesting!

I love learning about this space and put together this podcast to find people doing interesting things in micro private equity. Part of the goal is to build relationships and learn how to eventually do it myself in the future, and sharing those conversations along the way for free certainly helps.

I hope you like it!
Portland, OR

valueinvestor

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #26 on: January 31, 2019, 02:54:09 PM »
Everyone, I just wanted to say thank you so much! Thank you for those who reached out to wish me the best, and I will try to get back to each of your emails, ASAP!

In the meantime, please know it means a lot, and whether or not this purchase is a success, I really do appreciate you and everyone else who are trying to help!

All those who contributed, you have my deepest gratitude as well!

StockDuck13

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #27 on: February 07, 2019, 09:22:53 PM »
On Tuesday I published that podcast episode about search funds, I think you might find our conversation useful in your potential acquisition! Hope you enjoy it: https://www.thinklikeowners.com/podcast/2019/2/4/team-from-searchfundercom-tlao-ep-3
Portland, OR

valueinvestor

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #28 on: February 09, 2019, 03:43:57 PM »
On Tuesday I published that podcast episode about search funds, I think you might find our conversation useful in your potential acquisition! Hope you enjoy it: https://www.thinklikeowners.com/podcast/2019/2/4/team-from-searchfundercom-tlao-ep-3

Thank you StockDuck13, I'll give it a listen!


lotsofguts

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Re: Small Family Business in Canada (Trying to Buy It Out)
« Reply #29 on: February 11, 2019, 09:21:43 AM »
I have friends that might invest in this area. PM me