[jalapenos]

From reading it, and the various references to various potential buyers his father had already been in discussion with, it appears his plan was to sell it before that.

This is a big problem with these kinds of businesses. A lot of these solo owners who build up a business over the course of many decades serious underestimate how hard they are to sell, and have an unrealistic idea of what valuation they'll be able to get.

There is a whole industry of those bottom feeders the author referred to, who's business is precisely waiting for these sole owners to either die, or better yet become incapacitated to the extent they are forced to sell their businesses (but not so much that they can't hold a pen and read a sales contract), so that they can swoop in and offer them 2x or 3x - "what's your best alternative?".

[FredPret]

I'm not commenting on OP or their family business, but a multiple of 2x or 3x could be more than fair for a hands-on small business.

Consider that there are large public companies with established management systems that you can buy and hold, completely hands-off, for multiples of 5x - 10x. GM is trading at 5x, lots of banks are in that range, huge equipment rentals, mines, etc.

[im3w1l]

Doesn't a multiple of 5 basically mean the market is seriously worried that the business will shrink / go bankrupt?

[FredPret]

Perhaps, but investors are neither fully informed nor fully rational.

People get overexcited about new trends, then everybody jumps on the bandwagon, and good but boring stocks are ignored. Doesn't mean these are weak businesses though.

[lotsofpulp]

Why are the buyers referred to in derogatory terms? By the same logic, the seller should also be referred to in the same derogatory terms, for holding out for too high of a price.

Or one could do the sensible thing and leave emotion out of it, and realize business is just business. The market price is the price that results in a transaction.

[chmod775]

>Why are the buyers referred to in derogatory terms?

Because they are taking advantage of the owner's impaired judgement due to their personal situation/ill health in trying to extract an unfair price. Such behavior is referred to as "morally reprehensible" at best, and is skirting the legal line of what would be considered a contract made under duress at worst.

[gedy]

> Because they are taking advantage of the owner's impaired judgement due to their personal situation/ill health in trying to extract an unfair price

I think you are assuming way too much - a lot of older folks sell things "because they are done", and much is upside from when they purchased or started originally. Even when they are ill, many folks just don't care enough about the money enough to wait it out, negotiate, etc.

[chmod775]

I'm not assuming anything. I was answering a question based on:

> There is a whole industry of those bottom feeders the author referred to, who's business is precisely waiting for these sole owners to either die, or better yet become incapacitated to the extent they are forced to sell their businesses (but not so much that they can't hold a pen and read a sales contract), so that they can swoop in and offer them 2x or 3x - "what's your best alternative?".

It's not material to my answer whether that statement is true or not. If you think it is untrue, take it up with user "_rm".

[lotsofpulp]

So no one should ever buy from someone who is dying or ill?

That’s crazy. Supply and demand curves are in constant flux. The seller didn’t like the market prices when they were healthy, that does not mean they are entitled to a minimum price. Everyone gets ill and dies eventually, and everyone knows it. They are free to sell before that at the market price.

[chmod775]

> So no one should ever buy from someone who is dying or ill?

You can do that. However there's an issue with basing a business around reaching out to people with bad-faith offers the week their parents died or they were hospitalized themselves.

[jalapenos]

Easy to see how specifically targeting the dead or dying for profit is worthy of derogatory terms.

If you think otherwise, maybe you shouldn't view "bottom feeder" as derogatory? They keep the seabed clean do they not? It's all just "business".

And yes, the sellers in this case are also in the wrong, best case being bad luck, mid case being failure to prioritize, through to ignorance, delusion, stubbornness, arrogance, etc.

[amadeuspagel]

If there's a whole industry of them, shouldn't there be lots of competition to buy these companies?

[bell-cot]

There's vastly more profit in buying a few companies at 33 paise on the rupee than in buying lots of companies at 99 paise on the rupee. And coordinated punishment of any newcomers - who try to disrupt a status quo of systematic underbidding - does not even require communication between the incumbents.

[smcin]

What exactly is the coordinated punishment of newcomers?

[bell-cot]

The simplest tactic is to bid up anything they're trying to buy to 101+ paise on the rupee.

[lotsofpulp]

Then who is buying at 33 paise? You are contradicting yourself.

If something “worth” 1 rupee is not selling for 1 rupee,then the logical conclusion, absent collusion/cartel/monopsony behavior, is that it is not worth 1 rupee or even 99 paise, but rather the 33 paise that it is selling at.

[bell-cot]

The established players - and occasional well-behaved newcomers - are buying at (say) 33 paise on the rupee.

The "1 rupee" is what the business would be worth, in a highly efficient, open market. Which this market clearly is not. And the regulars are quietly colluding to keep it that way.

[actionfromafar]

A whole industry of bottom-feeders buyers, but the companies they are buying are not necessarily in the same markets as each other, at all.

[daedrdev]

Yeah his father probably had been receiving lowball and unserious offers for years if one were to find the right email folder