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jerryking : buying_a_business   36

The joy of boring business ideas
April 11, 2018 | Financial Times | by JONATHAN MARGOLIS
Slippers, razors and even gas boilers offer ripe pickings for profit and disruption.

Simon Phelan and his online gas boiler installation company, Hometree, are “aiming to replicate the success of online estate agent Purplebricks in an equally large, albeit more boring market: boiler installations.”......Start-ups doing anything new, cute or plain off-the-wall often struggle. .....Boring may be the new interesting.......Mahabis, a carpet slippers start-up, has sold close to a million pairs of its £79 product....another boring domestic product, razors, have proved to be a lucrative market for what are essentially tech companies, such as Dollar Shave Club (bought by Unilever for $1bn) and Harry’s.....It is not just products: dull-sounding online services also seem to pay off. London start-up ClearScore, a millennial-focused fintech company which offers users free credit scoring and personal finance guides, sold to Experian last month for £275m, after just three years in business......Phelan is pursuing gas boilers, not because he was interested in them, but because he was looking for a way into the growing smart-home sector. He wants to build a slick way to modernise boiler installation, so that by the time newer, more eco-friendly home heating technologies become standard he will already have a loyal customer base. This is why Hometree has more in common with tech companies than with local plumbers.

“Where I think people go wrong in entrepreneurship is building a product, rather than a business for the future,” says Mr Phelan....Making a neglected category simple and elegant is attractive.”

“All you have to do,” he concluded, “is not to see it as a gas boiler business, but a much bigger play......Phelan’s idea that new businesses need to be strategic rather than excitable about this or that gimmicky new product is one that other entrepreneurs would do well to follow.
disruption  unglamorous  smart_homes  eco-friendly  reinvention  home_based  new_businesses  new_products  millennials  fin-tech  credit_scoring  personal_finance  boring  buying_a_business  Dollar_Shave_Club  Harry’s 
april 2018 by jerryking
Search funds: The quiet, dependable, risk-averse sibling to the startup.
OCT. 1 2014 11:43 AM
“I Didn’t Want to Build the Next Twitter for Cats”
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Search funds are the quiet, dependable, risk-averse sibling to the startup. 

By Alison Griswold

for a small number of would-be entrepreneurs who lack either the confidence or the foolhardiness to believe they can create the Next Big Thing in tech, a search fund makes a whole lot more sense.

The idea behind a search fund, in its simplest form, is this: If you want to run your own company but don’t want to start it, then why not buy one? Search funds are financial vehicles typically set up by one or two people to raise money from investors toward searching for—and eventually acquiring—a small business. In one sense, they might be loosely described as micro–private equity firms, except that unlike Bain Capital, the average search funder isn’t looking to make a quick profit off buying, gutting, and reselling a struggling business. He’s interested instead in taking a shortcut to the top of the management ladder and staying there for the long haul..........On the bright side, in exchange for that slog, searchers get one of their main advantages over startup founders: diminished risk. “Starting up a company is a double whammy in the sense that you’re coupling an inexperienced manager or managers with a business that doesn’t exist,” Grousbeck says. “So you have the inherent risk of the venture itself and layered on top of that is the risk that the people running it have never managed anything before. In the search fund model, one of those risks is eliminated.”
buying_a_business  risk-aversion  search_funds 
october 2014 by jerryking
The rise of search funds and a new generation of bosses - The Globe and Mail
Boyd Erman
The rise of search funds and a new generation of bosses Add to ...
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Published Tuesday, May. 27 2014
buying_a_business  search_funds  entrepreneur  entrepreneurship  Boyd_Erman 
june 2014 by jerryking
The Leveraged Buyout Manual: How to Buy Any Company with Other PeopIe‘s Money
Aug 1981 | Journal of Accountancy (pre-1986). New York: Vol. 152. lss. 000002; pg. 78, 1 pgs | by Barbara D Merino.
LBOs  buying_a_business 
january 2013 by jerryking
How to Use a Lawyer in Buying or Selling a Company
December 1982 | The Journal of Buyouts & Acquisitions | By Betram K. Massing.

The lawyer for the buyer or seller in a private buyout or corporate acquisition is an important participant in the transaction. The lawyer's functions include: 1, counseling the client about the transaction. 2. advocating the client‘s position with the opposite party or in ancillary proceedings such as with government agencies. and 3. documenting and implementing the closing of the transaction. In counseling, the lawyer should call attention to potential risks and problems and suggest means of dealing with them. Tax implications, disposition of assets or shares, lenders' requirements, and the risk of latent liabilities are among the issues that arise early in an acquisitionA It is the cIient‘s responsibility to make decisions after being advised by the lawyer and to decide which points to compromise and which should be insisted upon. Clear communications between clients and lawyers and between buyers and sellers will make for a smoother transaction.
buying_a_business  selling_a_business  lawyers  howto  LBOs  mergers_&_acquisitions  M&A 
january 2013 by jerryking
A Few Necessary Precautions Before You Buy That Business
May 1991 | Profit-Building Strategies for Business Owners |

Buying a business takes great care. The first decision is what type of business to buy. For most people. it is best to choose a field in which they have had some experience. Sources for businesses up for sale include classified advertisements, business brokers. and informal networking. Next is a thorough investigation based on care and common sense. An initial question to ask is why the present owner is selling. The next step is to carefully examine the business. At this stage. an attorney and accountant can help check business books by looking for discrepancies in records of sales, earnings. and expenses. It is also important to check for pending lawsuits. If the sale involves real estate. it is vital to check for records of undisclosed liabilities. The next step is to determine how to finance the business. Usually. the new owner must put down of the purchase price and finance the balance. Sources for the remaining financing include the Small Business Administration. banks, and commercial lenders.
buying_a_business  CAMEX  mergers_&_acquisitions  M&A  decision_making  owners  precaution 
january 2013 by jerryking
Watermill Ventures
397010 HARVARD , Case (Field)
Watermill Ventures
Teaching Note: 398062
Watermill Ventures acquires and turns around an under-performing businesses. The case describes the criteria the company uses to identify acquisition candidates. its screening and selection process, and the way it introduces strategic thinking at the business it acquires. Steve Karol, Watermilll's founder, is concerned because the company has only acquired two companies in its three years of operation He is considering a number of actions, including establishing a Web site to broaden the base of contact.
Teaching Purpose: To expose students to a screening and selection process for acquiring companies, as well as the strategy development process used to turn them around and improve their performance.
Industry: acquisitions; steel
Issues: Acquisitions;Strategy formulation
Setting: Massachusetts, Alabama, 8 employees, $480 million revenues. 1993 Length: 21 page(s)
case_studies  turnarounds  HBR  under-performing  screening  buying_a_business  strategy  selection_processes 
august 2012 by jerryking
How to be a smart business buyer
March/April 1990 |D&B Reports | by Ted S. Frost
howto  buying_a_business 
july 2012 by jerryking
Be an Optimistic Skeptic When You're Buying a Business
Sep 1990 | Profit - Building Strategies for Business Owners | Anonymous

Even those who are experienced in acquisitions should be very careful when considering the purchase of a business. The best approach is to form a team with such professional advisers as an accountant. attorney. and appraiser. The best attitude for checking on a prospective business purchase is optimistic skepticism, which should start with an investigation of the seller's reason for selling the business An inspection of the physical plant will provide information about whether it is in need of alteration, its accessibility to public transportation, and the age of plant equipment. Prospective buyers should learn as much as they can about the company's finances, including information about recent sales and expenses. Special attention should be paid to factors that might affect future success such as key employees‘ willingness to remain on the job and customers‘ loyalty to the firm. The attorney and accountant will probe further for details so that a contract can be signed with confidence.
buying_a_business  entrepreneurship  lawyers  negotiations  mergers_&_acquisitions  skepticism  due_diligence 
june 2012 by jerryking
Purchasing a Business: The Search Process
Oct 08, 1987 | Harvard Business Review |by Michael J. Roberts, Ennis J. Walton.

Describes the steps necessary to purchase a small to medium size company. Provides an eight-part analytical framework. Issues covered in the framework include the following: the self-assessment, deal criteria, deal sources, resources necessary to purchase a business, the deal process, the evaluation process, negotiating the deal, and adding value and harvesting the venture.
buying_a_business  HBR  frameworks  criteria 
june 2012 by jerryking
The pros & cons of buying a business
Nov, 1994 | Black Enterprise | by Courtney Price.
The pros & cons of buying a business - excerpt from 'Courtney Price Answers the Most Asked Questions from Entrepreneurs'
African-Americans  buying_a_business 
june 2012 by jerryking
Buying instead of building
06.15.98 | Forbes | by Mary Beth Grover
buying_a_business 
may 2012 by jerryking
Go ahead: Buy the dream
June 15, 1998 | Forbes | by Mary Beth Grover
buying_a_business 
may 2012 by jerryking
Finding Info on a Unique Business - WSJ.com
June 6, 2006 | WSJ | Kelly Spors. When the Business You Want To Buy Is Hard to Find.

Many business buyers now search for acquisition opportunities online, but it does little good when seeking a rather unique business....Telephone everyone you can, mention the type of business you're seeking and ask whom they know who might be looking to sell. Even if they can't think of anyone, they may put you in touch with someone who can.
Kelly_K._Spors  buying_a_business  due_diligence  market_research  one-of-a-kind  uniqueness  hard_to_find 
may 2012 by jerryking
Due diligence
Apr. 1997 | CMA - the Management Accounting Magazine. 71.3 (): p17.| James G. Webster.

...Woodgate's own process of due diligence started with market conditions and customers, and then worked back through the product line to manufacturing and technology issues and, finally, to detailed financial information, which he believes was the right sequence for someone coming in from the outside.

They conducted an in-depth analysis of the market, sales history, channels of distribution, competition, customer base, and growth opportunities. The profitability and cash flow generated by each product line was analysed, as was the need for product rationalization and investment in technology....After comparing the company's products with those of the competition and interviewing four of Allanson's customers, it was concluded that the company's products were competitive in terms of quality, cost and technology. In fact, Allanson dominated the Canadian market and had a significant share of the U.S. market....Analysis of the size and dynamics of the electric sign industry was based mainly on a detailed report contained in Woodgate's business plan. The report's findings indicated that the market for the company's electric sign products had stabilized and there was reasonable growth potential for Allanson. The statistics and premises of this report were confirmed by independent sources....Woodgate says his most important asset throughout the process was his team of consultants. "Perhaps the greatest test of their skills lies in the last five per cent [JCK: i.e. last_minute] of the due diligence process when important problems sometimes arise with the potential to kill the deal. The buyer, at this stage, has become emotionally committed to the deal and is in no position to assess danger in a balanced, thoughtful way.
buying_a_business  cash_flows  dispassion  due_diligence  emotional_commitment  emotional_connections  howto  last_minute  product_portfolios  product_profitability  RoyNat  unsentimental 
november 2011 by jerryking
Brew a good deal with the right ingredients
When buying a business, check to see whether you have the prerequisites, or risk wasting your time.

* Do you have the experience necessary?

* Do you have the combined skill set?

* Do you have the business contacts?

* Are you able to retain the key employees?

* Will you be able to keep the major customers of the business afterward?
brewing  deal-making  exits  buyouts  beers  ProQuest  buying_a_business 
march 2011 by jerryking
FT.com / Entrepreneurship - Get the valuation right and don’t insult the vendor
November 9 2010 | Financial Times | by Roger Smith, a director
of Stirling Business Solutions, a business broker. “Don’t insult a
vendor by offering a price you wouldn’t accept unless you were
desperate, unless of course they are. You may have to live with the
consequences if he feels aggrieved and leaves the company in a bad state
before he departs. “To bridge expectations and manage risks, earn-outs
[which pay sellers more if they outperform] are the name of the game.
Spend as much time defining the formula as you did agreeing it in
principle. “Share swaps will preserve your cash and keep a younger
vendor incentivised. “Have a must have and a desirable list, as this
will help manage deal fever.”
exits  valuations  entrepreneurship  earn-outs  selling_a_business  buying_a_business  outperformance 
november 2010 by jerryking
Before You Buy a Business ...Or Any Major Asset
2009 | The Business Library |

There is a great deal of time and energy expended in buying a business
both before and after the closing.The period from your initial meeting
to actual closing usually covers 90 to 180 days and the post-closing
transition period can extend over 6 months to one year. Be aware of the
time required; you and your executives must set aside that time to meet
your commitments in negotiating and closing a deal. There is basic
information you will need to properly analyze and value the
to-be-acquired company, including: 1. the information needed to help you
determine your preliminary interest before proceeding with the
negotiations; 2. the work to do on a financial justification for
purchasing the company; and 3. the pre-closing documentation when you
are getting ready to finalize the price, payment terms, transition and
payment schedules, etc.
due_diligence  buying_a_business  filetype:pdf  media:document 
february 2010 by jerryking
The Internet Report
February 1996 | Morgan Stanley U.S. Investment Research pg. 41 |
by assorted writers. When looking for investment ideas in new markets,
we default to our favorite maxims from Don Valentine of Sequoia Capital,
who is known as one of the toughest and smartest technology venture
capitalists in Silicon Valley. Don follows several simple rules in
choosing early-stage tech investments: (1) Find “monster” markets that
can be really big, like the Internet; (2) find good technology and good
technologists who can stay ahead of competitive threats; (3) find
outstanding leaders/management teams that can drive the technologies and
markets forward; and 4) buy companies, not products, and try to find
companies that have achieved critical mass with their products — or can
achieve it, and can create some form of “barriers to entry.”
barriers_to_entry  buying_a_business  critical_mass  Don_Valentine  engineering  good_enough  high-growth  investors  large_markets  leaders  Mary_Meeker  Morgan_Stanley  rules_of_the_game  Sequoia  teams  technology  vc  venture_capital  filetype:pdf  media:document 
february 2010 by jerryking
Engineer a smooth takeover with five proven tips
https://hbr.org/2007/09/rules-to-acquire-by

09-17-2007 The Globe and Mail by Schachter, Harvey
MERGERS AND ACQUISITIONS - Taken from "Rules to Acquire" By Bruce Nolop, of Pitney Bowles. FROM THE SEPTEMBER 2007 ISSUE of the Harvard Business Review.

A close look at the world’s most successful companies reveals that, in general, they rely heavily on acquisitions to achieve their strategic goals......acquisitions can be faster, cheaper, and less risky than organic expansion. It’s a seeming paradox, until you realize what’s going on: Some acquirers have figured out how to do it right. Many have not.......Pitney Bowes embarked on our acquisition program.....they believed that they should develop a disciplined approach to making acquisitions and learning from them as an organization......More than 70 acquisitions later, they have a process firmly in place.......What’s behind the program’s success? ....a due diligence checklist that now covers 93 separate points of concern.....and a few key guidelines.

* Stick to adjacent spaces

Too many companies reach far afield when making acquisitions......Pick acquisition targets that are logical extensions of your company's current business mix, so they can be taken on incrementally. Such additions take advantage of the organization's tacit strengths - management know-how, customer insights, and cultural orientation - that are often ignored by more grandiose strategists. And they keep your brand consistent...... a 2001 McKinsey study: adjacent acquisitions correlate with increased shareholder value, whereas diversification into non-related areas actually reduces shareholder value. ....Profit from the Core author Chris Zook, looked for patterns in 2,000 companies’ growth initiatives and concluded that adjacent moves were the most successful.......Q: Can you really add more value to the target company than any other acquirer can?

* Bet on portfolio performance

Manage acquisitions like an investment portfolio, trying for multiple smaller acquisitions rather than one or two gargantuan bets. He notes that a Bain & Company study found the economic returns from acquisitions are greater if the purchase represents 5 per cent or less of the acquirer's market capitalization - so smaller is better. A portfolio approach keeps acquisitions to manageable size and hedges the risk that any one will go awry, producing more predictable financial results over time.......The classic benefit of a portfolio strategy, whether for acquisitions or any other type of investment, is that it produces more-predictable financial results over time.

* Get a business sponsor--No exceptions!

A clearly defined leader has to be personally focused on executing the business plan for the acquisition, assuring revenue targets and those often-elusive cost synergies.

That sponsor must drive the behind-the-scenes infrastructure projects that are essential to operational success, such as the integration of IT systems and HR policies, and develop strong relationships with the newly acquired management teams to ensure talent retention.

This can't be left to a corporate development group - it must be in the hands of an individual who is held personally responsible for the acquisition's success, and who reports regularly to the CEO and the board.

* Be clear on how the acquisition will be judged

You need to know exactly what you are seeking - what do you mean, exactly, when you talk of growth potential, or market development, or near-term synergies? For bolt-on acquisitions, which neatly fit into a business or market, financial returns should be more short term, while it will take longer for those benefits to accrue when the acquisition is a platform that takes you into a new, albeit still adjacent, business space or activity.

* Don't shop when you're hungry

What applies at the supermarket applies in corporate acquisitions. If you buy when you are hungry, you're likely to grab more than you need and be less price sensitive. On a strategic level, hunger can occur when you are seeking a missing element that you feel is urgently needed. Also problematic are acquisitions made to compensate for poor performance in existing operations.
adjacencies  bolt-on  buying_a_business  buyer's_remorse  CAMEX  checklists  Chris_Zook  clarity  due_diligence  emotional_discipline  growth  guidelines  Harvey_Schachter  HBR  leadership  M&A  McKinsey  mergers_&_acquisitions  metrics  organizational_learning  paradoxes  Pitney_Bowes  platforms  portfolio_management  process-orientation  rules_of_the_game  tips 
march 2009 by jerryking

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