Learning how to make great signs is important, but so is learning how to make a profit.
Even though I have mentioned it late in this article, you should initiate the financing process well before this point in the deal. If you think the deal could go somewhere, start the application process early. You do not want to cause the deal to stall while you wait to find out if you can get funded.
Use professionals
Lawyers and accountants are expensive, but their knowledge and expertise can save you tens or hundreds of thousands of dollars. Do not fool yourself into thinking you know the ins and outs well enough to make decisions without proper guidance. We saved ourselves serious trouble on both purchases we made thanks to our lawyer’s advice.
In 2015, our lawyer saved us $10,000 by doing due diligence on the seller and discovering the seller did not have the legal right to sell his equipment until he cleared a $10,000 charge against it.
In our recent transaction, our lawyer pointed out there was significant severance pay implications for the transitioning employees. He helped us iron out the issues in the purchase agreement before we signed it. We could have potentially been on the hook for some big payouts for employees that may not have panned out.
Your lawyer and accountant have likely done dozens of deals. They have seen many different scenarios and can help you find creative and effective recommendations to protect your business and wallet from the law and the tax man.
Find a mentor
Find a business mentor and consult with them. In our case, we reached out to a customer we knew had made a few acquisitions himself. We brought him into the last two deals we looked at and his knowledge and experience were of immeasurable value. The advice you get from your lawyer and accountant is necessary, but they speak from a focused perspective. A business mentor will often have a better grasp of the big picture from all angles. They will challenge your ideas, point out inefficiencies or improvements you missed, and give insight from mistakes and wins they already went through themselves. We have made a point to start taking him out to lunch every few months as part of our own personal business development.
Be patient
Both deals we ended up doing took way longer than expected. The sellers are going to get hung up on weird details. They are not going to understand why you want certain things dealt with. The lawyers and accountants always take four business days longer to get back to you than you would like. There are a lot of details to sort out, particularly in larger deals. There are a lot of moving pieces, and it can take time to massage all of them into place.
Be a sponge
Each experience brings something new. Even if you do not end up moving forward with the deals you look at, you will learn a lot. Your business vocabulary will grow. You will know what is going on under the hood of your competitor and you will be able to take each experience into the next opportunity. I strongly encourage you to explore every purchase opportunity that crosses your path simply for the educational benefits that come from the interactions.
Travis Sewell and Luc Michaud (author) own and run Signtek Industries Inc., in Prince George, B.C. They have an experienced team and a full range of services. Special thanks to Travis and Jamie Mayer of CanCADD for their valuable input for this article.
