Buying a niche carpentry business with key man risk

by a searcher from University of Texas at San Antonio

1 year ago

Does anyone have thoughts/advice on how to analyze a niche carpentry business with a highly skilled owner? The owner says that he has a number of FTEs and apprentices that are well on their way to becoming skilled enough to operate independently of the owner, but he says they have at least a couple more years before that happens. 

the business specializes in a a very niche service that has little competition and more demand than they can currently keep up with. The lack of competition means that the talent pool for this service is also extremely small and each new employee must be trained for years. 

Would you buy the biz with the stipulation that the owner must stay on until some of the other employees are fully trained?

1 like
88 views
7 comments

searcher from Durham University - Durham University Business School

Keep it simple - what would your role be post acquisition? Just general management oversight and sales? Or will you also need to handle technical product related work and train staff - realistically how long would it take to pick up these skills?

7 months ago | like reply | 0 likes

searcher

This is fairly common in lots of trade-type businesses where the owner is the qualified and most experienced person in the employee pool. If you're going to stipulate that the owner stay on until X-Y or Z are completed, make sure the owner is vested in the process. They will either need to legitimately be happy to stay on board for a period of time or they'll need to be financially vested, in the way of a seller's note/hold back/etc. Succession plans for us are more vital to a deal than the cost of the business itself.

1 year ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Self Funded Acquisition: A few Things I Learned

Examples of self-funded searcher websites

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Investor seeking Self-Funded Search Deals

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.