Buying and Selling Businesses

Key Takeaways:

1. Privately held companies represent a significant portion of the economy, with over 80% of businesses having 20 employees or less.
2. The majority of businesses make less than a million dollars in revenue, presenting an opportunity for individuals to acquire profitable businesses in the one to $20 million revenue space.
3. Financing options, such as SBA loans, allow individuals to acquire businesses with a minimal equity investment.
4. Buying an established business provides the opportunity to leverage existing cash flow and growth potential, rather than starting from scratch.
5. Marketing and technology play a crucial role in increasing the value of a business and attracting potential buyers.

 

Chapters:

Timestamp Summary

[0:00:38] Introduction of Xavier Egan and his background

[0:03:30] Discussion on the wealth transfer happening in small businesses

[0:05:52] Importance of the one to $20 million revenue space

[0:07:18] Generational shift and the opportunity for buyers

[0:08:45] Potential consolidation and mergers in the market

[0:09:23] First step for buying a business

[0:10:33] Access points for individuals in private equity

[0:11:21] Starting with smaller valued companies for growth opportunities

[0:11:21] Starting with smaller valued companies as a transition tool

[0:12:02] Using traditional terms like SBA loans for financing

[0:13:18] Cash flow is key in business capitalization

[0:14:41] Importance of generating income and cash flow in a business

[0:15:55] Transitioning to a profitable established business

[0:18:18] Ensuring a comfortable exit strategy for business owners

[0:19:56] Thinking of a business as an investment instrument

[0:21:26] Understanding the need for active investments and planning for retirement

[0:21:56] Evaluating the value of a business and its potential for growth

[0:21:56] Importance of understanding the value of a business

[0:22:47] Buying a business for its consistent performance

[0:23:48] Leveraging other people’s money to buy a bigger company

[0:24:35] Getting regular evaluations for succession planning

[0:25:11] Difference between price and value of a business

[0:26:30] Buying a business for guaranteed growth

[0:27:11] The importance of marketing and technology in businesses

[0:28:55] The role of technology in creating more value

[0:29:14] Robert Smith’s success in private equity

[0:30:10] Alternative investment opportunities in buying businesses

 

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Phillip Washington, Jr. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.