6 Critical Mistakes to Avoid When Buying a Business in 2024
Judd Goodrich at Mainshares.com – Down Payment Raise
John Panaccioni at Folla Capital – Down Payment Raise
Patrick McMillan Ampleo – QoE review Accounting
Kevin Henderson at SMBLaw
Patrick Stroth at Rubicon Insurance Reps & Warranty Insurance
The Acquiring Minds episode https://youtu.be/3BZFan-72a8?si=xin4OxvLkze-OMaU
Summary
In this episode, Jon Stoddard reflects on the journey of Justin Willess, who faced significant challenges after acquiring a business. Jon emphasizes that setbacks are not failures but rather learning experiences. He shares key strategies for minimizing risks in business acquisitions, including maintaining a healthy debt service coverage ratio, avoiding draining personal savings, and the importance of having a strong deal team. Additionally, he discusses the role of insurance in protecting against potential misrepresentations and liabilities in business deals.
Takeaways
Setbacks are temporary experiences that can lead to Growth.
Aim for a debt service coverage ratio of at least two.
Never drain your personal savings when acquiring a business.
Get the seller out as soon as possible after acquisition.
Build a strong deal team to advocate for you.
Conduct a thorough quality of earnings review before purchase.
Reps and warranty insurance can protect against seller misrepresentations.
Using creative financing can minimize personal risk.
Having professionals on your side is crucial during negotiations.
Every challenge faced is a stepping stone to success.
Chapters
00:00 Introduction and Acknowledgments
00:30 Lessons from Setbacks
01:54 Key Strategies for Business Acquisition
04:18 Importance of Insurance in Business Deals
Keywords
business acquisition, debt service coverage, financial strategies, entrepreneurial setbacks, insurance in business, deal team, quality of earnings, seller misrepresentation, creative financing, M&A strategies
