How to Make an Incredible Acquisition Using ROBS

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Manage episode 226692020 series 1770904
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Today’s episode is the first installment of a new Quiet Light series entitled “incredible acquisitions.” In these features, we’ll bring you guests involved in successful acquisitions of Quiet Light listings. This is something we’re trying out in order to feed our listeners what they want to hear – so email us your feedback!

Today’s story is interesting because the buyer made his deal using ROBS. Rollover for business startups (ROBS) allows you to invest retirement funds from a 401(k) or individual retirement account (IRA) into your business without paying early withdrawal penalties or taxes. Rick, the new owner of the website Gunskins, a financial executive looking for another income stream to take him into retirement, knew his stuff and made the decision to make his purchase with ROBS. Today’s episode is the soup to nuts of the acquisition process and will be beneficial whether you’re doing this for the first or the fifth time.

Episode Highlights:

  • The process of searching – how long did it take and what approach did Rick take?
  • The depths of the search process – how far Rick dug into each potential business.
  • When the focus narrowed to selling physical products.
  • How he structured the finance for the purchase.
  • ROBS vs. SBA
  • What was it about this particular business that stood out to Rick.
  • The importance of the person behind the business for sale.
  • How many other business Rick looked at in his multiple range.
  • Whether a buyer should look beyond their multiple range.
  • We (re)stress the importance of due diligence.
  • Rick walks us through the first days of the takeover of the business.
  • The transition process is never easy nor stress-free and escrow agents are key.
  • If he had to do it again, what Rick would do differently.
  • Rick’s plans for building out.
  • Staffing changes Rick worked through in transitioning.
  • Rick shares last minute thoughts for buyers and sellers.

Transcription:

Mark: So a few years ago I had a couple of experts … I had a call with a couple of experts for a way to buy a business called ROBS, right? Roll Over for Business Startups. It’s kind of an unknown or pretty little known way of financing a purchase and we mixed up in a lot of red tapes and everything else but is it a viable option to be able to buy a business and run a business and finance that purchase outside of kind of the traditional spend cash or SBA loan. I know you and I are starting up this new series within the Quiet Light Podcast called Incredible Acquisitions. We don’t have a great schedule for it yet but this is the first installment of that episode and I’m excited because you’ve got somebody who made an incredible acquisition thus the name using ROBS.

Joe: Yeah absolutely and it’s an interesting one because the individual behind the purchase, a guy named Rick. He’s about 50 years old; very mature high level CFO in public corporations. So he knows his stuff. He gets the numbers, he understands it. And so it’s not a light decision that he decided to go with the ROBS. He was going to do an SBA but he and his wife who’s a CPA decided the best approach for them would be a ROB and they purchased GunSkins, closed … I want to say about nine months ago and we talked about his search. We talked about his due diligence process. We talked about his take over, what training and transition was like and now whether or not it’s a family run business.

Mark: Yeah this Incredible Acquisitions is really everything soup to nuts about doing an acquisition for people that have actually done an acquisition. And hopefully, it’d be able to give some insight especially to first time acqui

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