SHOULD I RUN FROM THIS ACQUISITION PROSPECT?

We're actively acquiring businesses and our screening process is severe, meaning we look to screen most organizations "out" as opposed to "in" (It's a choice we made almost 2-years ago). Long story short, we found a prospect and they passed our initial screening criteria. Our follow-up questions were typical and included 2020 Financials, Seasonality of business, FF&E, and a series of Customer Base questions. The response I got back from the broker was as follows:

- 2020 Financials - I know you mentioned the owner doesn't keep monthly books, but as we enter Q4 any idea of this year's financial performance would be helpful? Believes they'll be up over last year (But doesn’t track anything) - Seasonality - Which[redacted]months of the year do they not have business? If you have monthly financials from 2019 that would be helpful (Balance Sheet & Income Statement) - Dec, Jan & Feb, but they don't keep monthly figures - FF&E - Is there any transferring with the sale? - Yes, all equipment used transfers

  • Customer Base --# of Clients and % business with - 10-15 Customers per year, job site average is 10 days to 2 weeks. --% splits for Commercial vs Residential business 90% residential --Average job $Sale and $Cost All very different

    This would be a nice "add-on" to another holding, but the lack of financials leads me to believe that there is going to be difficulty in operations as well (Don't even get me started on Sales/Marketing initiatives!)

    My question... Should I run or not if you were me?

    Thanks in advance!

    Sam P.


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