Three D's Business Buying

A framework for identifying valuable business acquisition opportunities through three key situations that often lead to businesses being sold below market value.

The Three D's Framework

  • Death

    • When business owner dies and kids don't want to inherit
    • Creates opportunity to purchase from estate/heirs
    • Often leads to motivated sellers
  • Divorce

    • Business needs to be sold as part of divorce settlement
    • Creates urgency to liquidate assets
    • Can lead to below-market pricing
  • Distressed

    • Business took on too much risk
    • Company needs quick sale due to financial problems
    • Opportunity to buy below intrinsic value

Real Example Mentioned

  • Speaker bought business from supplier
    • Would have normally cost $15-20 million plus inventory
    • Ended up purchasing for just cost of inventory
    • Result: Got entire business for fraction of value
    • Additional benefit: Cut COGS in half since it was a supplier

Key Takeaway

  • These situations create opportunities to:
    • Buy businesses below market value
    • Acquire assets at significant discounts
    • Take advantage of motivated seller situations
    • Find deals others might miss
    • Get better terms than in normal market conditions
50:02 - 52:08
Full video: 57:21
SP

Shaan Puri

Host of MFM

Shaan Puri is the Chairman and Co-Founder of The Milk Road. He previously worked at Twitch as a Senior Director of Product, Mobile Gaming, and Emerging Markets. He also attended Duke University.

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