Buying a Business

A few business brokers, a retiring founder, a little due diligence. How tough could it be?

Dear Inc. , I'm close to buying a company after an often frustrating several months of searching. I have to believe that a fair number of your readers also want to buy a small company and -- like me -- have no idea of the emotional roller coaster that lies ahead. I've kept a very thorough log as I've gone through this arduous process, and I'd love to tell others about the experience my family and I went through. -- H.F.C.N.

The Business Opportunities section of The Washington Post was spread out before me on the dining room table last March. I'd never looked at it before and was amazed at the dozens, no, hundreds of businesses for sale. Bars and restaurants. Print shops. Beauty parlors. Liquor stores. Car-repair shops. Dry cleaners. Quick-lube franchises.

Somewhere in this sea of tiny black type was The One. My wife, Judi, was playing with our two daughters in the family room so I could have a few quiet minutes ("Hush, dear, Daddy's trying to find a business to buy").

I began wading through the ads slowly, one by one.

ANSWERING/beeper srvc -- Growing bus. w/no real competition. Serving Warrenton/Culpepper. Asking $90K DP. Owner financing. 893-5511. Griffin-Fitzgerald & Assoc.

ANTIQUE RESTORATION -- Family bus. Silver Spring. Est. 30 yrs. Best clients, 4 empl., $175,000. Gross $218,000. Profit $100,000. 585-6490.

AUTO BODY/PAINT -- Prince William County. All new equip., large facility, long lease. Asking $375K w/terms. MVBB 823-0800.

And on and on. I had absolutely no idea what I was looking for -- but I'll know it when I see it. Certain names and/or phone numbers kept popping up. These must be the brokers or agents for the owners. I'd never spoken to a business broker, never known anyone who was a business broker; in fact, I didn't know anyone who knew anyone who was a business broker. What kind of world did they live in that I, a sophisticated, Ivy League-educated 37-year-old, had never encountered one? How did you talk to them? How did you get them to take you seriously?

I imagined thousands of people like me eagerly reading the Post, looking for exactly the same kind of business -- my business -- and hitting the telephone at 9:00:01 on Monday morning to try to take it away from me. Like hell they would.

With a yellow highlighter I noted all the names or phone numbers that appeared more than twice. I wrote up a little spiel and read it out loud a few times. I felt myself starting to get ready as if for a big game or a big meeting.

How had it come to this?

I had resigned from my job the first week in January 1989 and stayed on until March 1. If "resigned" suggests that it was entirely my doing, that's not a fair characterization. But at least the parting was civil. My severance pay ran through the end of September. If I couldn't find anything to do by then . . . well, that was inconceivable (remember I said that).

There wasn't a particular moment when I decided to buy a small business. I simply got more and more comfortable with the idea over a period of several months. I had started my first business (a regional magazine) along with my college roommate when I was 24 -- we ended up being taken over five years later. I started a magazine for someone else. I had run a public television organization. And I had been the CEO of an independent TV news company in Washington. This time I wanted to do it myself. No partners. No investors. Just me. When I started looking for a company, I decided that I'd be very clever and find one to buy before anyone knew it was on the market. I'd contact all the lawyers, accountants, and bankers in Annapolis. Surely they would have a client or friend who wanted to retire. I pictured a friendly man of around 65, getting tired, nobody to turn the company over to, wanting to take care of his longtime employees. Not greedy, doesn't want a lot of money down, a nice long-term payout. I'm his salvation (and the company's). A nice little business. Doing a couple million. Doesn't really matter what it is. No retail, of course, but maybe light manufacturing, or some kind of distributorship, or a niche service business. . . . How tough can it be to find something like this? I'll probably have several to pick from.

Nothing. A dry hole. Dead ends.

Friends and family kept asking me, "So why don't you start something of your own?" I'd done it before. I had no fear of going out to look for venture capital. I could do an outline for a business plan in my sleep. I knew how to put together a pro forma. I still had months of severance pay yet to go. So what was I waiting for?

Something was different. I was different. It wasn't just that I was a little older, or that I had perhaps lost my nerve. I fancied myself an entrepreneur, but I wasn't thinking like one. When I started the magazine, I was 24 and the concept of failure never entered my mind. Besides, it was a great idea. It was big. I had to do it. I was consumed by it. I wanted to control my own destiny, to make a major contribution to the world.

But that wasn't how I was thinking this time around. I was thinking about what I didn't want. I didn't want to risk everything; I didn't want to spend six or nine months or a year and have something not work; I didn't want the emotional commitment a new business demands; I didn't want something that would take me away from my family ("Sorry, dear, Daddy's sleeping at the office -- again").

My wife was seven months pregnant with our third child. She wasn't going to be in a position to bring in a lot of money anytime soon. Besides, I didn't have the "big" idea. No fire in the belly. And on top of that, I definitely didn't want a board or a group of investors looking over my shoulder. I've already read that book, thank you very much. Give me a nice little business that needs some marketing savvy or maybe just some new energy. Nothing wrong with it, of course. Affordable. Maybe even located in town so I can walk to work and come home for lunch. I don't need to build an empire with it (at least not until the kids are a little older), just take out a reasonable salary. Am I asking so much?