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Buying a Suppliers's Company

Branching out into a new realm of business by buying the assets of a former supplier has its pros and cons. Just ask these entrepreneurs.

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This story appears in the April 2006 issue of Entrepreneur. Subscribe »

Entrepreneur Tom Amoruso is used to working with suppliers as the founder of Shelving Concepts, a Houston company that sells storage shelving and had $1.7 million in 2005 sales. But as Amoruso is learning, buying one of your suppliers is another matter altogether.

Last July, Amoruso, 46, acquired the assets of manufacturer Dixie Shelving along with another former supplier, Dura Rack, at auction for $100,000. He bought the company names, phone and fax numbers, website addresses, and Dixie Shelving's equipment. He purchased Dura Rack's name for potential future use, but not its equipment. "I would always tease [Dixie Shelving's owners] and say, 'If you're ever interested in selling, I'd be the guy to buy,'" says Amoruso, who's delving into manu-facturing for the first time because he sees wide growth opportunities. "Dixie Shelving had a really good name, and I intend to make it even better," he says.

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