An acquisition opportunity was handed to me recently and I am a bit outside my experience. A fellow searchfunder suggested that I post something here and see what I could learn from the community.
I have not been in a turnaround before (company is currently losing money and needs to be turned around or liquidated) but I can acquire the company for almost nothing. The idea of an acquisition that requires very little capital investment (no personal guarantee, lenders, or investors) is very attractive, but I might be overly optimistic about the upside potential. It would be great to get some advice on:
1. how to evaluate a turnaround - most valuation methods assume positive EBITDA,
2. lessons learned that a first-time turnaround searcher should know, and/or
3. any other insights so I can go into this with eyes wide open to the real opportunity at hand.
I know typically we are all looking for the "good businesses" (profitable, high growth, etc.) but I've had a few opportunities for a "good businesses" fall apart because of difficulties securing the capital required to purchase. Trying to get past my blinders.
Thanks for any insight!