Here’s a story to inspire; a story to help you believe that your dream of business ownership is possible. You’re not stuck in corporate America forever, with endless meetings and endless layers of approvals to get anything done. This is a story of how one man declared his independence from corporate America by buying a manufacturing company, and how you can too. It’s really not as hard as you think.
Jim was a young baby boomer, in his early 50’s, and spent many years in corporate America. He worked in an executive position for a large and well-known aerospace company for almost his entire career. Jim, however, was not a mechanical engineer. He worked on the financial and business development side of the business. Over the course of his career, he had P&L responsibility for entire divisions. So although he didn’t know how to physically make the company’s products, he knew how to make the divisions of the company work, to keep them profitable and on target.
While in college, Jim, like most of his contemporaries, looked towards corporate America, dreamed of landing a job with a major corporation, and to work his way up the ladder into job security and a good pension. His best friend from school took a different track. Alex went to work for a much smaller company with only about 60 employees. A few years down the line Alex used the nest egg he had saved to buy a home to purchase a small medical instrument manufacturer instead. He reasoned that buying the business would provide an income that would eventually get him the house he wanted.
Jim and Alex maintained their friendship over the years. Both had married and started families. The couples tried to have dinner together a few times a year to stay in touch. At one such dinner during their mid-thirties, Jim’s wife complained that all he did was work. The company required him to travel to their various plants throughout the U.S. and overseas. Jim had spent 100 nights away from home the prior year. He had missed soccer games, school plays and a lot of his young children’s milestone moments.
Alex’s wife chimed in bragging that her husband never missed a game or a play. He controlled his own schedule. Jim commented that his job as part of corporate America provided security that Alex would never have. Alex just laughed.
Fast forward to another couple’s dinner a decade later. Alex and his wife invite Jim and his family to their vacation home on Lake Winnipesaukee for the upcoming July 4th holiday weekend. Jim explains that he’ll be flying out to the company’s Washington State location on July 5th and won’t be able to make it. He regrets not being able to see his best friend’s new vacation home and spend some relaxing boat time on the lake. “Business must be good,” Jim asks Alex. Alex explains that sales have doubled twice since he owned the company. “We’re also launching a brand new website and national marketing campaign,” Alex says.
Jim comments that the aerospace company he works for has been trying to launch a new website for the last 3 years. Unfortunately, the project has been caught up in endless meetings, committees and legal reviews of every word and comma that was proposed for the site. Alex said, “That’s why companies like mine can take market share from companies the size of yours, we move with decisive, entrepreneurial stealth speed and we get the job done.” Jim’s depressed reply was, “I wish my life worked like that….”
That night and over the course of the next few years, Jim couldn’t stop thinking about the track his life took in corporate America as compared to that of his friend. He made a great living, had a good amount of money saved, but he knew there was something missing. It wasn’t just the freedom to make decisions and control of his schedule.
What bothered him most was that his friend Alex was building his own wealth and retirement, not someone else’s. Jim knew what made businesses successful. He knew how to run them and grow them, but he was doing it for others, rather than himself. He started wondering…. what if?
Now in his early 50’s, the kids had graduated from college and the house was almost paid off. Jim had taken care of his family well. After many years in corporate America, now he wondered if it could be his turn. He decided to kick the idea around with Alex over a beer. Alex explained that business acquisition might be easier than Jim thought, and not as risky.
“When I bought my company it had enough cash flow to replace my salary and to support the debt service,” Alex explained. Jim said that he didn’t want to deplete his entire savings to use as a down payment. “You won’t have to, with most business acquisitions you only have to put down 10%. In my case, I put down 15% and the Seller held a note for 10%.”
Jim wondered if he’d be able to replace his entire salary, which was now over $250K. Alex said, “I was a kid when I bought my company. You have a larger down payment and can, therefore, afford to buy a larger company. Not only can you replace your salary, but the right business will have the cash flow to pay the acquisition loan and then some.”
Alex explained that there was risk in everything, but Jim was in a great position to determine risk, as he’d done it several times for his employer in a business development capacity. He knew how to look at a company and their history and determine the opportunities for growth as well as what their threats were. Jim decided it was time to declare his independence from corporate America by acquiring a manufacturing company.
Fast forward another 10 years to the 4th of July weekend with Alex and Jim celebrating on Lake Winnipesaukee. Alex’s son had taken over his company and he was enjoying retirement. Jim had made an acquisition, had doubled the size of the company and now was himself considering retirement.
Jim and Alex spent time over a scotch researching M&A professionals who specialized in manufacturing companies to help Jim navigate the sale of his company. Looking back, what Jim thought was risky, was the very thing that would now secure his retirement. Acquiring a manufacturing company and leaving corporate America, he admitted to Alex, was the best decision he had ever made.
Are you a "Jim" who longs to be an "Alex"? It really is easier than you think. Start a confidential conversation about what might be an appropriate acquisition for you and your family. Even if you’re not ready to pull the trigger, you can get yourself on the top of a call list when we have something that matches your criteria. How much business can you buy? Find out by contacting us:
One last thing…. the names in this story have been changed to protect the privacy of the incredibly happy, well adjusted and financially sound.