My Oh-So-Humiliating Business Acquisition Disaster Story

Honey, I don’t know how to say this. I think I’m going to lose my investment in the firm I bought, and we may be liable for a substantial part of the business’ debt.

I muttered these words to my soon-to-be wife.

This disaster should not have happened!

You see, seven years earlier I became self-employed. I conceived and built companies for investors. And I also helped business buyers avoid the junk so I could introduce them to great opportunities – businesses quietly for sale by-owner on the “hidden” market. I had developed what I thought were street-smart tools for due diligence and pricing a company for sale so my clients knew what they were getting before they bought the business.

Yet—I bought a company the wrong way.

How could I have been so stupid?

  • BUYER FEVER

I had a near-fatal case of it. I wanted this particular company so badly that I temporarily suspended my common sense. I nearly lost all the money it had taken me years to earn. And what about my reputation? Why did I make this mistake?

  • I was a know-it-all, a do-it-yourselfer.

I did not force the seller to substantiate ALL the good news in the company’s financial statements. I was mesmerized by the seller’s forecast of more good things to come. I failed to fully investigate the non-financial aspects of the business (i.e., the firm’s relationships with its customers, employees, creditors, suppliers, and landlord). I did not employ the best (and safest for me) mix of acquisition and post-acquisition financing.

It took me a year to untangle myself from this mess. I was burning through money three ways:

  1. My lawyer demanded a $30,000 (in 1980 dollars) upfront retainer to take my case.
  2. My consulting practice was virtually shut down during the process.
  3. I was pumping personal funds into the business to keep it afloat; if I had not it would have wiped me out because of my personal liability for the firm’s debt.

Why am I revealing this to you?

  • If it can happen to me, it can happen to you.

One of the first things I did after I was done with this dumb deal was to become an expert on creative financing, business valuation and how to buy the right businesses the right ways. Had I known about some of the tactics I explain to you in my how-to books, I would not have been under so much pressure while I was extricating myself from my mess.

Those experiences, and advising clients for more than 30-years, enables me to inform and guide buyers of small and midsize businesses, so they can be the first choice of brokers and sellers. And complete more-profitable done deals sooner with less aggravation at lower cost in the USA, Canada, Australia and the U.K.

You can search more effectively to find, and then contract for better deals, sooner, if you schedule an hour of coaching with me.

Email Ted J. Leverette, The Original Business Buyer Advocate ®. “Partner” On-Call Network, LLC

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