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Business Acquisition

Maybe you are a business owner already. That’s awesome. Owning a business is a source of so many avenues for building wealth. But have you ever thought about buying other businesses? If so, what kinds of businesses would you consider?

When a company has excess cash reserves on hand, it is a great problem to have. Large enterprises have a staff devoted to treasury—to managing those cash reserves using multiple strategies. Smaller companies don’t always have the luxury of full-time staff devoted to this task, but this role can be outsourced to people who manage and grow money for a living. I’ve been exploring the role of treasury in helping manage cash reserves in a series of articles about things like brokerage accounts, commercial real estate, and cryptocurrency <links to those three articles>.

One very interesting way to utilize excess cash reserves is to acquire a new business. Are there complementary businesses, competitors, or similar businesses that you could purchase to grow?

Maybe you have some ideas floating around in your mind already but let me share a few examples of what a second or even third business acquisition could look like.

  • The Realtor: Maybe you started out as a Realtor, and now are leading a team of people—Realtor associates and support staff—to take advantage of the housing market when it is humming along.

But like anything else, housing is cyclical. What do you do when the market slows down? I’ve heard from Realtor friends how they get messages in their email inbox and social media platforms every day about business opportunities. Somebody always wants to sell you something. Before clicking on a random sales pitch from a stranger, you want to have an idea of what you want to take on. Maybe it’s in property management, maybe in teaming with a builder to manage their new construction sales. Maybe it is in purchasing short term rentals, or multi-family housing.  Or maybe you setup your own real estate agency business.

The great thing about real estate is that it can be a great business to add to your portfolio, even if your main business is well outside real estate.

  • The Baker: We know a business owner who started a catering business, but also built an event space, and a coffee house (and yep, she and her husband also do short-term rentals). She had spent her high school years working in local restaurants and then started catering as a natural next step. She saw the opportunities to expand into related areas with separate business entities, and she took it. If you’d like to hear more of her story, we had a great podcast interview with her you can listen to here.
  • The River Runner: We also recently spoke with someone with more than just a toe in the short-term rental market. She had purchased a property where her family could live in the main home, but where there were several other properties to fix, redesign, and then offer as short-term rentals. It has been going really well. And then along the way, she also had the opportunity to purchase a canoeing/rafting operation along the river right next to the rental properties.

The two businesses complement each other well, as people who are traveling and staying at the rental properties are looking for things to do in the region. And adventurers on the river are often looking for a place to stay. Owning both has opened up opportunities and revenue she would not have had otherwise.

Sounds pretty great, right?

We help business owners evaluate purchases of other entities and looking at cash-flow, equity, and deal construction to purchasing other businesses as a way to grow your wealth.  With the average age of many business owners in the mid 50’s or higher, economic and geopolitical instability there are many opportunities to purchase additional businesses to grow and utilize excess cash reserves.

Want to schedule a call to discuss?