Do your investors prefer you to find a business that "needs fixing" that trades for a lower multiple or one that needs no fixing but just has an owner who is passive/doesn't want to work hard anymore to grow it?
I know self-funded searchers like businesses that "need fixing" that they can pay 3-4x for. In either case, we're all likely first-time operators so probably stay away from "needs fixing?"
Any help or thoughts would be great!
Do Traditional Searchfund Investors Prefer Businesses at lower multiples that "Needs Fixing"?
by a searcher
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Actual results:
• 55% earned less money after attempting a turnaround. • 30% continued to operate at the same profit. • Only 15% increased profit.
If more buyers knew the proven tests to predict profitability, there would not be so many disappointed new owners.
Turnaround specialist XXXX Partners, which has worked with more than 100 companies, reported a few years ago that for every company the firm has saved, it has overseen the liquidation of roughly three others.
Buy right—you make lots of money and enjoy the lifestyle that business ownership offers! Don’t delude yourself about the company’s weaknesses. You may not pay much to buy a loser, but you might not get much.
Good luck if you intentionally buy a loser.