Can you really buy a business with no money out of pocket?
April 13, 2023
by an intermediary in Kansas City, KS, USA
People ask me all the time, “Can you really buy a business with no money out of pocket?”
The answer is YES, we see these deals all the time! Here is a perfect example of one such business available right now...
Business type: E-commerce/FBA in the Beauty/cosmetics space History: Sales as high as $2,300,000 in###-###-#### Last 12 month sales $645,000 Assets included in deal:
* Full currently operational business with existing DTC, FBA and wholesale customer* $2.6 million retail value of inventory
* $1 million in pending wholesale PO's
* Email database of 8,000 customers
* Robust Amazon seller account with multiple established products, and with flagship product showing 4 Star rating with over 800 reviews
Asking price for this business? Just $749,000!
How to buy this business for zero money out of pocket? Pre-close: #1 $550k Secure short term loan to help you buy out existing owner. (Inventory based financing or asset based financing) You can pay this loan off in 6 months (see below) #2 Secure $200k in revenue based financing (RBF) against current revenues of business
DEAL DONE, with NO money out of your pocket!
How to pay back the acquisition debt in 6 months?Post close: #1 $200k by utilizing net profit from finalizing the pending $1 million in wholesale PO's using PO factoring to get the deal done fast with no money out of your pocket to fund inventory production #2 $600k in profit from selling existing $2.6 million in inventory #3 $48k from emailing third party offers to existing email list (We average $1 per month per email in pure profit)
Just these three activities will generate you $848k total cashflow!
This simple acquisition process pays off your initial acquisition loans so you own the business free and clear, puts an extra $100,000 in your pocket, and you've got a thriving direct to consumer business in your portfolio!
PS – Here is a link to the actual business for sale if you want to take a closer look at it: https://www.westboundroad.com/clean-beauty.html
from Rice University in Houston, TX, USA
How do you think of risk with that much leverage and fast of a payback period target? Seems like anything short of a perfect outcome could be really bad, really fast. Acknowledging all deals have risks, seems like this deal structures risk profile is (much?) larger than normal deal structures.
from Florida State University in Palm City, FL, USA