Bad Blood, it's by the WSJ reporter that broke the original story.
The craziest parts are about how blatantly she was lying, as well as about how absolutely batshit the "Sunny" guy is. There were so many red flags internally, but they threw millions at intimidating former employees.
So? That's nothing special at all. This stock went from 9 to under 3 in a matter of weeks again. Guess how that happened? No seriously, guess.
Please man, you're embarrassing yourself. Stop trying to play investor and actually read up about it. I highly recommend How to Swing Trade by Brian Pezim to start with.
Venture Deals (mentioned by u/jchaselubitz) is a great resource as is "Mastering the VC Game". I will also plug "Oversubscribed" which was written by Founders and is a quicker read (Link to book).
The other key resource is YC's Startup Library; their "Guide to Seed Funding" contains a lot of what you're asking about.
One thing you may be missing is an accurate valuation of the assets and equipment. If you'll be using it going forward, how much life is left and what will it cost to repair/replace.
The sloppy books might be a benefit if they slop in the right direction [grin]. Also see if you can verify accounting with something besides bank records. Maybe sales tax? Maybe purchases of COG supplies.
I would definitely have some contingencies in the money you're paying in the future. Structure it with clawbacks if things are not as they were warranted.
For more than you want to know check out this book by folks whose day job is buying companies like this (but a bit bigger). https://www.amazon.com/dp/B07KXYT8V4/ and a podcast they did by the same name. The podcast might be easier to find just the parts you're needing.
Cannabis.
I could not read Pete Walker without being stoned the first two times. Maybe a page sober, but probably not more than a few sentences.
Now I can. Heck, I got through The Black Swan sober and that is saying something!
Barriers to entry are there. But like a lot of boutiquey things, many people would like to run such a business and not strictly related to reasons linked to a good business plan.
May be easier to buy an existing firearms business rather than trying to start one.
This may be useful to you:
https://www.amazon.ca/HBR-Guide-Buying-Small-Business-ebook/dp/B01KP33K4Y
Who says "impossible"? Experts in the field say it's decades away, and they are the ones I tend to believe.
As to why a bunch of people are creating startups, I suggest reading this
I'm not sure if this particular business is a good deal, but if you're contemplating whether to buy or start a business I recommend reading Buy Then Build, it's a great book on buying businesses.
I just finished reading this book. It guides you through the process of acquiring an existing business.
Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game https://www.amazon.com/dp/B07JKM2F5Q/ref=cm_sw_r_awdo_navT_a_7K91HW3DK3VD1DBV131Q
There is a lot of good advice here. Consider reading this book as well:
HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company (HBR Guide Series) https://www.amazon.com/dp/B01KP33K4Y/
Also consider that there are other opportunities out there. Maybe the best thing you can do is to just spend the time vetting this deal and understanding the risks and upsides, well eventually walking away. There are plenty of other businesses in a similar position, so it's hard to imagine that the very first one you are considering buying is the right one for you.
Fun read!
Paul Ingrassia has a surprising amount on the rise and fall of Saturn in his book Crash Course.
My two favorite highlights:
1) The write-up you posted gets at it with this bit:
>Even the people that built and nourished the political rivalries at GM realized that assigning another small car to an existing division would result in a compromised product that would have no character, no unique selling proposition.
But one thing the book spends a longer time on the notion of the internal politics going on at GM. Namely that a lot of middle-high corporate folks looked around and said "Jesus we've made a rat's nest of insular thinking and internal rivalries, and that's probably hurting us." So to some extent, Saturn wasn't just GM attempting to purge their past sins in the small car market, it was also them trying to make this little island off in Tennessee to see if GM itself would/could work better than it was currently doing. They would set up design flow differently, they wouldn't be so antagonistic with the unions and the unions promised they would go into it with a clean slate, they would have their own new dealership network. There was almost this "marriage counseling" mentality to it, that by launching Saturn as their "own company" with more independence, they could figure out how to run the GM mothership better by seeing what Saturn does well.
And then after a very brief honeymoon, the whole thing became another insular bureaucratic GM rat's nest that limped along until it dies.
Which brings me to my second-favorite thing I learned from the book:
2) According to every industry estimation, Saturn had one (1) profitable year. From 1985 to 2010, year-of-our-Lord 1993 is the only time they ever brought in more money than it took to keep the lights on. In the end, Saturn cost GM billions and billions of dollars.
No, but this book is a great resource. I am reading for the second time, and actively looking for another business to buy myself. https://www.amazon.com/Buy-Then-Build-Acquisition-Entrepreneurs-ebook/dp/B07JKM2F5Q
The Black Swan by Nassim Nicholas Taleb
Nudge by Richard Thaler
Check out this whitepaper from Price Intelligently. I read it when I first joined a SaaS company and needed to get up to speed on pricing strategies. I found the content to be easy to understand and had some helpful suggestions.
I also found Wed Bush's Product Led Growth book really helpful. It covers a lot of topics outside of strategy, but tons of good ideas in it.
First question, do you have experience running an online business in the niche that you're looking? I've owned an online retail business for over 21 years and still sometimes feel like I don't know what I'm doing... but at least I have my experience to fall back on. I can't imagine buying a business in a completely different industry.
As for due diligence, you should know what reasonable multiples for the industry/niche you're in... e-commerce sites are currently selling for around 3-4x SDE for medium sized (six figure SDE), 2-3x for <$100k SDE, and higher multiples for businesses with more than 7-figure SDE/EBITDAs.
You should verify everything... Ask for 3 years financial statements (profit & loss/income statement, cash flow, balance sheet), 3 years bank statements for all business accounts, and 3 years business tax returns. If you don't know how to read those, hire a CPA to review them and look for any anomolies.
And about "passive" income... no business is truly passive. If you buy a website that's generating "passive income" and don't do anything, it might continue earning the same revenue for a few months or a year, but things change and competition will encroach on your business. Whether it's a content site or an e-commerce site, they all require constant optimization to even stay at the same level. From organic SEO to PPC to social ads... they all need to be constantly optimized or you will be left in the dust. If you don't know how to do any of that or have the money to hire professionals, then it's probably not a good idea to jump into a business you know nothing about.
Also, read Buy Then Build it's a great book about buying an existing business to grow.
Thank you for sharing!
Yeah I'm trying to learn more before getting into swing trading, but reading this book:
https://www.amazon.com/How-Swing-Trade-Management-Strategies-ebook/dp/B07HZ38XVQ
The author literally says he's not into buy stocks before earnings, but everyone has a different strategy.
Have a read of this: Buy Then Build: How Acquisition... https://www.amazon.co.uk/dp/B07JKM2F5Q?ref=ppx_pop_mob_ap_share
However, you ALSO need to know how to run a business if you have not done so before. I highly recommend reading:
Also, what is crucial in those above figures is the net profit (not cashflow). Do you know what it is?
You can open a LOT of different types of businesses for $200,000. But what type of business you should open depends on you/your girlfriend's skillsets, experience, and long term plans. Do you want to work full-time in the business? Are you okay working 80 hour weeks? Do you have any skills that lend yourselves to a particular industry or trade?
If you have decent credit, some experience, and a good business plan, you can buy a business through the SBA with 20% down. That means, with $200k, you could easily buy a $600k business and still have a little operating capital ($50k) left over. A $600k business should be generating about $200k a year in free cash flow, which, after debt service, should generate about $120k a year. If you can grow it, pay off debt faster, then it could be even more profitable.
If you haven't started a business before, then you might consider buying one first, running it - hopefully growing it - and selling it before starting something from scratch. Here's a good book on buying businesses - Buy Then Build.
>I’m absolutely not looking for anything that needs to be run hands on as a job,
Then this is not the business for you. At it's simplest, if you're looking at buying in the SMB space, remember that if the current owner is also the operator, and you don't want to do it yourself, you need to pay someone to do it. In most cases, that's going to wipe out any profit the business generates.
If you're serious about buying in the SMB space, I'd highly recommend getting a copy of The Messy Marketplace by Brent Beshore: https://www.amazon.com/Messy-Marketplace-Selling-Business-Imperfect-ebook/dp/B07KXYT8V4
How many businesses generating 0.5-1.5M in annual FCF have you looked at already?
From this post, my guess is zero.
Buying an existing business is a huge topic that requires a lot of unpacking.
Start by reading the HBR Guide to Buying a Small Business.
It will frame many of the key pros and cons, as well as give you lots of direction on next steps and clarify many of the early questions you have.
Good luck!
There are all sorts of exits available for DTC businesses. The size of the outcome depends on what your revenue structure, business operations, and future potential look like.
I've had this in my goodreads queue for a while.
Why can't you represent yourself as a team member of the fund? It lends a lot more credibility to say you're part of a team backed by xyz investors looking to purchase a single business, rather than a random tire kicker. Also, are you approaching business owners directly, or going through brokers? The latter will not divulge detailed info without financials.
If you haven't already, pick up a copy of HBR Guide to Buying a Small Business. https://www.amazon.com/HBR-Guide-Buying-Small-Business-ebook/dp/B01KP33K4Y/ref=sr_1_1?ie=UTF8&qid=1489500489&sr=8-1&keywords=harvard+business+buying+business