Small Fortunes: The Acquisition Entrepreneur's Guide to Buying a Profitable Small Business

By Dr. Mark Hagar

For decades, countless Americans have quietly operationalized their entrepreneurial ambitions by purchasing established, profitable small businesses to control their destinies and create millions of dollars in personal wealth.
The pride of ownership and the personal and professional fulfillment of owning a successful business are undeniable, and the lure of charting one's course has tremendous appeal. But, making the decision – even entertaining the idea – of buying a business can quickly turn into an overwhelming activity. Success is even more elusive for the acquisition entrepreneur who fails to use an appropriate acquisition process.
In his new book, Small Fortunes, The Acquisition Entrepreneur's Guide to Buying a Profitable Small Business, long-time acquisition entrepreneur Dr. Mark Hagar shares with readers lessons learned from more than two decades of buying and operating small businesses and offers a structured, common-sense approach to valuing and acquiring a profitable small business.

• Language: English
• Publisher: BookBaby
• Release date: Mar 24, 2023
• ISBN: 9781667851228

Book preview

BK90068122.jpg

© 2022 All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

ISBN 978-1-66785-121-1 eBook 978-1-66785-122-8

The information provided in this book is for general information and educational purposes only. It does not, and is not intended to, constitute legal, accounting or tax advice. Readers should seek appropriate professional guidance throughout the acquisition process.

Dedication

To my wife, Nancy, and my sons, Nicholas and Christopher, whose unwavering support inspires and motivates so much of my life.

And to my parents, David and Daloris, for teaching me the value of hard work, the importance of empathy, and the virtue of kindness through a lifetime of countless examples.

Contents

Introduction

Prologue

Chapter One

Acquisition Entrepreneurship

Chapter Two

Search Criteria

Chapter Three

The Acquisition Team

Chapter Four

Financing

Chapter Five

Finding a Business to Buy

Chapter Six

Assessing an Opportunity

Chapter Seven

Analyzing Financial Statements

Chapter Eight

Valuations

Chapter Nine

Making an Offer

Chapter Ten

Confirmatory Due Diligence

Chapter Eleven

Transitioning the Business

Epilogue

Conclusion

Key Terms

About the Author

Introduction

I never set out to be an acquisition entrepreneur and certainly never thought to have a portfolio of acquired companies; I was just a guy who wanted to buy a business.

I was 27 years old when I sought to buy my first company. Working for a subsidiary of a Fortune 500 company, I decided to control my own destiny and started my search for the perfect business to buy. My motivation was born in the realization that I didn’t like the culture of a large organization – layers of bureaucracy, meetings upon meetings, exhausting months on decisions that should be made in weeks, and wasting weeks on decisions that should take days – it all seemed so unproductive – so I set out to change my lot in life.

Prior to jumping on the bottom rung of the corporate ladder, I had worked in a number of small businesses. Comparing my corporate life to the family feel of working in small companies, I simply could not find professional satisfaction. I knew from experience that I would be happier, and would prosper professionally as a business owner; I liked the idea of being my own boss, of having my fate in my own hands, and my future income directly related to my success.

Faced with this reality, I set out to buy a business. I knew the printing industry very well because it’s where I had spent most of my working life before taking the corporate position. As I searched for a business for sale, I considered dozens of opportunities, most within industries I lacked familiarity. While many of these prospects offered ample opportunity for success, I found comfort in print-related businesses where my experience added value.

After more than a year, my search produced an opportunity when I met a printing company owner planning his retirement. The owner had a transition strategy. He envisioned a five-year buyout plan where he would employ the eventual purchaser, allowing him to continue to earn an income and allowing the new owner time to train within the organization, learn the systems and processes, work with the staff, and meet the customers.

It was a pretty good plan.

Buying a business is intimidating, but some of my doubts and fears were allayed by joining the company as a manager with the owner still in place to introduce me to the inner workings of the company. This situation, while not perfect, helped with the transition. Ultimately, we did not follow the five-year plan, agreeing instead to execute the deal after just two years. I secured a loan and bought the company. It worked out exceptionally well for both of us. He was able to retire, and the company continued to prosper.

I genuinely thought, at least for some time, that I would spend the rest of my life happily running and growing my printing company