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The wilderness is full of former corporate types wandering around trying to turn themselves into entrepreneurs. Some got fired or downsized. Some just had to strike out on their own. And for too many, in this nasty economy, the wandering won't end anytime soon.
But some emerge from the process -- a year or two of networking, tire kicking, money raising and deals-that-fell-through -- the better for it. They're refreshed instead of frazzled, their business skills stronger instead of atrophied. They've made new friends rather than alienate their old ones. And best of all, they're running a company, maybe even one they partially own.
Lucky, you say. And there is certainly some luck in every business success story. But how you carry out your search -- how you conduct yourself -- will have a lot to do with how successful you are. So, some guidelines:
Be realistic. Your experience should make you a logical candidate to run the business you want to buy or start. The size of the operation, its complexity and the difficulty of the management task should be a stretch for you, but a reasonable stretch.
Talk to everyone. Kevin Flanagan looked at 45 companies. Owen J. Sullivan between 85 and 100. Ernie Lawrence, making the rounds of bankers, lawyers, accountants, investment bankers, business brokers and private equity firms, met with hundreds of people. These three Milwaukee-area entrepreneurs, all successful in their careers to date, say you never know where a good business lead will come from.
"Anybody I could get an audience with I would talk to," says Mr. Flanagan, 47, who rose up at a series of midsize companies to be a chief operating officer before setting out to buy his own firm. "People referred a lot of distressed tool-and-die companies to me. On some of them," I told my wife, "I was stunned when I got out of the car. They were dumps. But you meet them, be courteous, make a good impression. You learn something from every situation."
Be brief. Don't go anywhere until you've reduced your search to a one-page outline of your business acquisition goals -- industry, size, location, financing you may have, and contemplated management structure.
Take odd jobs. It may seem demeaning, a pointless departure from your goal of owning and operating a company. But people you meet will ask you to do a project. For pay. Be flattered. And if the people or company involved are ones you might want to do business with, it might be a good idea to accept the offer.
Messrs. Sullivan and Lawrence both did enough consulting work during their searches to avoid dipping into savings. Mr. Lawrence, 59, looking for a company to buy since the last one he ran was sold two years ago, cemented a relationship with his financial backer by handling a project at a company the firm owns. "In the process, I got to know them and they got to know me," he says.
Mr. Sullivan, 46, a former International Business Machines Corp. executive, did projects for about a dozen companies, broadening his experience and sharpening his thinking, he says. "It was a tremendous year, personally and professionally."
Give something back. Mr. Lawrence was hoping the many professionals he visited with would pass his name along to others, widening his network and bettering his chances of finding the right company and backers. Likewise, he kept in mind the goals of those he was meeting with, "and tried to give them something in return." A referral to a banker. A chance for Milwaukee mergers and acquisition professionals to meet with a British financing firm he hooked up with. It mostly boils down to good manners. Be nice and respectful to the people you meet, and maybe they'll do the same.
For the men from Milwaukee, the approach worked, though not exactly as each had expected.
Owen Sullivan made proposals to buy four companies, but couldn't agree on price with any of the sellers. Then, out of the blue and after he'd been without a full-time job for about a year, Manpower Inc., the big temporary labor firm, also based in Milwaukee, called and asked him to run a unit that provides financial and audit services to companies. The unit, Jefferson Wells International, employs 1,300 and Mr. Sullivan is chief executive.
Mr. Sullivan's deal search "adds to his value," says Manpower CEO, Jeffrey A. Joerres.
Kevin Flanagan, with backing from a wealthy local investor, made offers on three companies, ranging in price from $3 million to $14 million, and each deal fell apart for its own reasons. "Now what do I do?" he thought. "I've spent about a year and a half in this game." The phone rang. A banker he'd had a nice meeting with mentioned his name to a headhunter who was looking for a new CEO for AQS Inc., a local firm that sells and maintains software for insurers.
Mr. Flanagan beat out three other candidates, and even has a shot at getting an equity stake in the closely held firm as its turnaround continues.
Ernie Lawrence just signed a letter of intent to buy a firm and is beginning his due diligence. He won't discuss the firm or details, but is anxious to get back to running something. "I've been bouncing around," he says. "It is such a totally serendipitous process."
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