I recently listened to the 'How I Built This' podcast with the founder of 5-hour energy. One of his first ventures was to buy a business and turn it around. How do people go about finding businesses for sale and what are the keys to understanding the financials of those businesses?
Find a business broker that specializes in something you understand. Knowing the business will prepare you to understand the financials. Bargava, among other education and training, worked in his parents PVC business prior to buying the PVC-based outdoor furniture business you refer to.
I suggest working with a CPA with evaluating financials. I do this all the time for my clients. I am always happy to support fellow members of Co-Founders Lab in this way. Feel free to email or call with your questions.
Gary Massey, CPA
There are small investment banks which focus on connecting potential buyers with potential sellers. I have personally spent over a year doing this type of sourcing for private equity groups. If you need help finding the proper business to buy, just contact me.
When I was running my business, I was contacted by quite a few business brokers. The most interesting to me was a firm in Kansas City that is retained by senior level transitioning professionals who want to purchase a company. They work closely with their clients to determine their interests and to look for companies that are a match. I got very far along in conversations with a wonderful gentleman. While these conversations fell short of a transaction, I thought the model was very interesting. Check out the DVS group in Kansas City. As far as financial due diligence goes, its the same as any other process, more art than science - but always dig as much as possible and talk to lots of different folks within the organization!