Small fish or big fish

searcher profile

May 11, 2023

by a searcher from Fachhochschule Pforzheim, Hochschule für Gestaltung, Technik und Wirtschaft in Ulm, Germany

Hi all,

After looking into many small firms (less than 5m of revenue) and being eachand every time surprised by things that left me wonder how that can be (recent example an owner who was off by a 6 digit figure when telling me the salary he is taking out of his company) I start to wonder, if I should be going after much bigger companies hoping that they are run more professionally.

Any one experience and thoughts on this?

Ali

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commentor profile
Reply by a searcher
from University of Pennsylvania in Atlanta, GA, USA
To me, lack of professional management represents an opportunity.

Just have to make sure the 'bones' are good and you have some assurance outside of the financial statements that the numbers themselves aren't wildly off.

For example, if you are told there are X clients on contract at $Y annual revenue and Z employees making $X, does that pass the smell test with what you're seeing on the financials?

Once you get more serious, a QoE provider can help you understand what's really going on and tease apart 'owner is not deeply versed in the financials' from 'the financials are wrong'.
commentor profile
Reply by a professional
from The University of Alabama in Birmingham, AL, USA
If a business is doing well in most aspects, despite of current ownerships lack of understanding, that just looks like upside to me. It’s not uncommon for owners at this level to not understand basics about their numbers, but they’ve grown a strong foundation nonetheless. They likely just know they made “enough”

As always, you have to dig in and see if it’s right for you.
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