Buying a Plumbing Business with a Key Man Risk worth it? - Searchfunder

Member resources:

Member directory

Searchfund list

Company contacts

Industry reports

Transaction multiples

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from Narsee Monjee Institute of Management Studies
in Toronto, ON, Canada

1yr ago

Buying a Plumbing Business with a Key Man Risk worth it?

Considering to buy an 8 year old Plumbing Business with $1.5M Rev (and growing) run by 3 Plumbers. The Owner is also from a plumbing background but he’s not doing the jobs anymore. The Lead Plumber who is also the Service Manager is the younger brother of the Owner. The owner is relocating out of the country to pursue other interests. The brother is working on getting his Master plumbing license.

I met the owner and he shared that the brother is happy to continue working as a plumber and does not want him to take over as he is also not the right profile to lead the company. I’m meeting the brother as well and will ask him if he is ok with me taking over. Owner suggested me to consider incentivising the brother to stay back.

The owner has agreed to stay back for a longer transition but my question is should I enter this business where there is a key man risk of not just the owner but also the brother?

I want to incentivise the brother to stay on. Are there any successful models?

Should I consider including a higher seller note and earn outs contingent on the brother staying to mitigate this risk?

Share

0 Likes

577 Views

Login to read all 17 comments

reply by an intermediary 1yr ago
from California State University, San Bernardino in Stratton, CO 80836, USA

I once helped a couple of buyers regarding a small surveyor company with the owner's son being the key person running the company. Both buyers were employees of the very same company. The son assured them he had no desire to run the company and was looking to return to school for another career. We developed several due diligence questions for them to pursue back with the owner. Since I did not hear back from them over several weeks, I followed up to see how it went. They told me that upon further investigation, the owner started dramatically reducing the price and then offered it free to both buyers. Eventually, they learned that the owner was facing multiple lawsuits and also had found a way to pillage the employees' retirement accounts to pay company expenses. Coming from a family of relatives who always prefer to transfer their companies to family members I get uneasy when I hear about situations where the key people (being family related and already running the company) have no desire to take over the company. Personally, I would tread very carefully or move on to a better probability.

reply by a searcher 1yr ago
from Purdue University in Overland Park, KS, USA

Just curious as I'm also hoping to acquire a construction service business - are you thinking about operating the business yourself and potentially working as one of the plumber?

More on Searchfunder