Author Topic: SMALL BUSINESS INVESTORS  (Read 1280 times)

hoping2retire35

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SMALL BUSINESS INVESTORS
« on: March 23, 2016, 08:28:24 AM »
Does anyone invest in local small businesses? what is your strategy? how much do you diversify? How do you meet/approach business owners? what proof of ownership do you get?

mohawkbrah

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Re: SMALL BUSINESS INVESTORS
« Reply #1 on: March 23, 2016, 08:52:43 AM »
would not recommend it. small businesses have a high failure rate and if it's not your own business why would you want to?

Financial.Velociraptor

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Re: SMALL BUSINESS INVESTORS
« Reply #2 on: March 23, 2016, 09:42:11 AM »
I think the better way to get diversified exposure to this space is by buying the shares of community and regional banks.  Those guys are going to be better at underwriting the risk on a pool construction or HVAC company than you are due to experience.

onlykelsey

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Re: SMALL BUSINESS INVESTORS
« Reply #3 on: March 23, 2016, 09:46:41 AM »
Bad idea, and you then become subject to federal securities offering laws (and state blue sky laws, to the extent applicable).  No thanks!

Rufus.T.Firefly

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Re: SMALL BUSINESS INVESTORS
« Reply #4 on: March 23, 2016, 11:33:02 AM »
I am a business broker (selling small to mid-size companies); I have 5-years worth of experience in this field. What kind of business are you looking into?

There is not really a good one-size-fits all answer to your question. Here are some general tips:
- Most businesses are not passive. You buy the business to run it and be actively involved.
- A business broker or intermediary is helpful, if you can find a good one. Business owners are VERY skittish about talking to the general public about selling their business. Sometimes you can find really good deals by just knocking on doors, but this can be a bit of a needle in a haystack approach.
- Valuations vary widely depending upon the industry.
- Proof of ownership, free of liens, etc. is why you should hire an attorney to perform the closing to protect you.

If you can provide a few more details about what you're trying to accomplish, I can give a more detailed answer.

Quote
Bad idea, and you then become subject to federal securities offering laws (and state blue sky laws, to the extent applicable).  No thanks!

Most small business transfers are asset sales, not stock sales.