So I bought a business, now what?

You may be thinking "Okay, so I buy a business, then what..?"

That's one of the most important questions you could ask. How do you add value to the asset when you buy it, so that you can make additional cash flow after paying the acquisition debt, or sell for a higher valuation.

It's a critical question that you must be able to answer when you're buying a business. (And it's totally okay for the answer to be "do nothing", under the right circumstances).

We have been looking at a lot of businesses that are being sold by very old (70s) business owners. These guys are old, and crusty, and simply bringing in some young blood can add value quickly. Professionalisation and building out of systems and processes can make a business a far more attractive buy to most buyers, and so in simply doing so, you can buy a business and quickly sell it again to PE or another firm (if this is your game. Ours is to hold).

One company we're looking at getting under LOI doesn't even have a website! Another I was speaking with today said they want to get their clients on maintenance contracts for the equipment they sell/install, but simply haven't gotten around to it - such a simple thing to incorporate in a sales cycle that will add additional, recurring revenues!

My point is, you don't need to re-invent the wheel in order to re-start a business' growth.

Having said that, and on the flip-side, it's very important not to get complacent and underestimate how important the owner still is. You will never be more knowledgable than them in their subject matter, which has been developed over decades of being in the business. The exercise of knowledge transfer here can be extremely challenging, and thinking that simply 'breathing new life' into the business will guarantee you success is a naive trap. Don't overlook the owners importance, even if they're old and crusty.

If you're systemising them out of the business or hiring a replacement, which will, of course, add value as owner dependency is reduced, make sure both you, and the seller, have committed enough time (often years), to achieve this.