Exploring New Horizons: The Potential Acquisition of a Larger Business

In the exciting yet daunting world of small business ownership, growth opportunities can often present themselves in unexpected ways. Recently, I found myself at a crossroads with a unique proposition: the possibility of acquiring a larger competitor in our region.

My current business—generating approximately $60,000 in annual revenue—has been presented with the chance to buy out a well-established competitor for $150,000. This larger entity operates within the unit-based sector of the mobile services trade and reportedly generates between $100,000 to $150,000 annually, with a profit margin of around $10,000.

We received a loan approval for the entire purchase price at an interest rate of 8% over five years, resulting in monthly repayments of approximately $4,600. While I’m trying to decipher the implications of interest rates and potential tax advantages, I’m also grappling with a pressing concern: after accounting for wages and the loan obligations, will the business generate enough cash flow to sustain operations? I’m only considering a modest salary of $1,000 per month for both myself and my business partner.

Our strategy hinges on the potential to nearly double the revenue once we take ownership. However, it’s important to recognize that while optimism fuels our plans, certainty is elusive—transforming ambitious projections into reality is never guaranteed.

At this critical juncture, I find myself seeking insights from outside perspectives. There are undoubtedly many factors to consider that I may have overlooked, and any advice or queries would be greatly appreciated as I navigate these waters.

Update: Excluding the owner’s salary, the net profit stands at $50,000, and we estimate the existing assets of the business to be around $100,000.

If you have any thoughts or questions regarding this acquisition journey, please feel free to share. Thank you for your time!