Would You Buy This Guitar Company for $99,000?

0:00We'll set Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % beers anymore. And thumbs downing on just the plus inventory alone. Buying a business might be the biggest financial decision of your life, and most people try to make it alone. Cold emailing brokers, reading financials at midnight, and guessing whether the numbers actually hold up. Acquisition Lab exists so you don't have to. It's the leading community, platform, and fund backing serious vetted acquisitions entrepreneurs with a standing board of advisors who've actually done this. People who will talk you out of a bad deal as fast as into a good one.

0:37The education and the deal search tools are free and open to everyone before anyone asks you for a dime. The easiest way to field that is a roundtable. It's a free live conversation where you talk through what you're actually stuck on with other buyers and advisors who've been exactly there. Nothing recorded, so it always stays in the room. Sit in on the next one for free at acquisitionlab.com slash roundtables and tell them that Acquisitions Anonymous sent you. Brian, welcome back, man. Yes, sir. Here to search. So, you know, the first time you came on, hopefully you had to get past the, oh, they just click record and start creating this podcast feel.

1:16So are you prepared for that this time around? No.

1:24So catch us up. Last time we talked, like you were working inside a family office, right? Kind of doing like a search, a captive search fund type thing. And then you bought a business. Like, so, so what happened? I actually didn't buy it. So I was looking for business for about two years. Yeah. I saw the market, the way it was headed. And I was like, based on the constraints I'm operating under, I'm probably not going to buy a business. So I found this other opportunity to start a business under kind of like a franchise type model and I just took that. And so like I did that, but then I'm also now working with a partner to look at self-funded search as well.

2:01So I'm, I'm doing all the things. Well, Heather, Heather will probably agree with you when it turns out that digging stuff and running the mine is very expensive. Sometimes people pivot to selling shovels. Yeah, I would agree with that. That's what I do. As somebody who has several shovel businesses now, I'm very excited about it. double business. Yeah. I do. I enjoy what I do, but I also see the positive outcomes as well as, you know, a few negative, um, you know, we can't ignore that, but, but we still see, uh, many life-changing positive outcomes for our clients and what makes it fun. Yeah.

2:41A hundred percent. Well, Brian, before I pitch you on this deal, and by the way, Heather, Brian is a guitar player. So I picked a deal that is perfect for him. But before I pitch you guys on this deal, Brian, what is the business you guys started? How's it working? So it's a water, fire, mold mitigation company. So basically, let's say rain happens somewhere in San Antonio. I'm sure that never happens. But it floods your basement, your walls get wet, your floors get wet. But somebody basically pretty much has to cut that out so somebody can put it back because you can't really allow that stuff to get wet.

3:21So that's us. Or there's a fire in your home and a lot of your walls are basically burned to shards. Your floors are burned to shards. Somebody has to figure that out. Or there's been rain slowly dripping into your basement through a little small window. And now mold is growing. And it smells really bad. and you look at it and you think this is probably not good for our health. That's all we handle. So that's kind of what I'm doing. Well, awesome. And so is it geographically limited? Like where are you guys located? Yeah. So I've moved, I've moved to Cleveland. So I'm now handling Cleveland and like a hundred miles from Cleveland, pretty much.

4:02Cleveland, huh? Well, my fiance lives in Columbus. So I had to, I had to move a little bit more towards that area. so I couldn't stay in New Orleans forever my wife is from Youngstown so I've spent a while in Ohio believe it or not almost all of our jobs have been in Youngstown and Canton and Akron I've had almost no jobs in Cleveland Heather have you spent much time in the Rust Belt? no I haven't that's it that's my answer no I have not it's so weird Well, you know, Brian, Heather's from SoCal and I'm in San Antonio. And basically these are two regions that have not seen a sustained economic downturn for more than a year or two in almost 40 years.

4:51So it's just weird to go to a place like Youngstown, which has been losing people, money, and has been on decline for decades. Like to see what that does to a town, because it just almost doesn't feel like America compared to when you're in SoCal or in San Antonio. Cleveland, different story. You know, it's the Paris of the North. so totally get it all right let me put you guys on this deal bill welcome in all right brian our guest today is a guitar player sweet so we got a expert on the pod is what you're telling don't hold that against them but he's a guitar player um all right so i found this one it is a well-known brand name guitar pedal company for sale in san diego california and it's called the boomerang and they're asking$99 ,000 for the business.

5:38Cash flow is$75 ,000 on$312 ,000 in revenue. And it's been around for, let's see, 28 years. So they're asking, just so I get this right, they're asking like 1.1, 1.2 times cash flow for the business? Yeah. Okay. Continue. Did I have you at hello? I'm interested. I'm interested. Yeah, you had multiple. Well, Brian was just telling us how he couldn't find a business to buy. I was like, dude.

6:13Brian, you're a guitar player. What do all those pedals that I see the guys pedaling, what do those things do? I think that this... I'm in now already. I don't need you to talk about this anymore, but you continue. any. You're supposed to save your judgment for the end, but okay. Okay. No, no. I mean, just in general, I'm on stage, I'm playing electric guitar and you see the guys reaching down with the pedals and using their feet. Like what are they doing? So today's video is actually sponsored by a company I started called Bedrock Quality of Earnings. And Bedrock is a service for business buyers.

6:51If you're going out to buy a business, one thing you don't want are surprises. There are tons of stories out there of people who buy businesses. They get into them and three months later, they realize the numbers that the seller told them, well, they weren't true. In a situation where people are often buying businesses and signing personal guarantees, meaning they're really on the hook to return that money to a bank or anybody they borrow it from, that could be a disaster. So Bedrock is a quality of earnings firm. There are people you hire that go in and look at the seller's books to make sure what you're being told is actually true.

7:21And there's lots of quality of earnings firms out there. What makes Bedrock different is it's the only one that has three things. Number one, a CEO, a guy who comes to us from a big four firm and has been doing quality of earnings reports, well, basically for a long time, his whole career, basically. Bedrock is also backed by people you trust and know, including me. You know where to find me if you're unhappy with their service. And number three, Bedrock uses the latest technology, AI, and all that different kind of stuff to make sure you get the best results at the best price. So if you're interested, book a call with the CEO, Will.

7:52You can go to bedrockqoe.com or check out the link in the comments below or the one on the screen. Thanks. Well, it's changed in the angle and direction of the sound. I mean, it helps. I mean, you can't do everything with just paying other to a chord. So this adds a little different element to it. Like there's certain songs that like you've probably, everybody's heard that essentially like they're doing something different with the same chords. but they've changed some element of it. And so these little pedals allow people to do that. So it's part of creating unique music, but at their level of revenue and cash flow, I'm very unimpressed at this point.

8:37So continue, but I'm already a no. I don't know how much change from a no, but continue. All right, well, let's see if the listing does it for you. in 1994 it was a established in 1994 as a household name in the music industry boomerang was established in 1994 in grapevine texas it's a household name in the music industry they're cash flow positive and debt-free very lower overhead for daily operations and now it operates out of san diego california sales and admin duties are done from a personal residence and so here it looks like people are actually like doing videos on the device itself. A 30 minute deep dive in this thing.

9:23I love it when these businesses are not anonymized. I mean, you can actually see the product. You can see the reviews of it. You can see the founder. I mean, this is cool. It looks like there's more though below the YouTube. These are like YouTube reviews of the product, which I assume are positive or they wouldn't put them here. Here's what's for sale. They have one contractor, all the intellectual property all remaining inventory the trademark brand name of boomerang looper all schematics bill of materials and pcb files for manufacturing all media use for the websites packaging advertising and other e-commerce platforms they have a shopify store a reverb.com store an amazon fba store and an ebay store you get a customer email list and a dealer and distributors list heather do you want to come comment on their spelling this is not spelled correctly.

10:10It almost looks like Disturbers. There's no word in this letter. Bad spelling. They give you an introduction to their current supplier and it's all home-based. The Boomerang Phrase 3 sampler is an iconic piece of music gear. Though there are many guitar loopers available, the Boomerang looper stands in its own lane. They're proprietary features that only the Boomerang pedals have and which sets us apart from the competition. there's significant growth potential that remains untapped due to budget constraints given the popular and the boomerang looper pedals with the current market share this company has the potential to reach three million dollars in annual gross sales uh they want to be paid directly support and training can be discussed and reason for selling pretty straight up legit i am retiring and uh they give you a link to the website bill boomerang looper so i'm willing to bet this is a guy you know an electrical engineer or a hobbyist who in 1994 invented this thing and has been in and around the guitar enthusiast circuit for you know 25 years selling this thing literally or metaphorically out of his trunk at trade shows you know that being said why is it not bigger might be because they can't you can't actually buy it it's sold out on their website

11:36That's pretty funny. So what does this actually do? Does anybody understand? So like, do I press the button to like record something and then it like loops that sample over and over again? I think we have to watch the video. I think Brian can tell us he's a guitar player. I'm assuming it adjusts the, basically the tone and tenor of whatever the guitar is actually producing to adjust in certain ways. Someone has an acoustic guitar, they don't have electric. The acoustic is going to sound like an acoustic sound, no matter what we're doing. But this allows some sort of other kind of adjustments to it.

12:16But at the level of revenue and EBITDA, I just wonder who the hell is even using this. Well, they're sold out of almost every product. Oh, wow. From the one guy that buys this? Yeah. So, I mean, what I see here is, like, this is a guy who wants to retire. Okay. This is a guy who wants to retire. Can't blame him. He's probably either run out of capital or wherewithal to manufacture the next run of the product. Or, you know, the MOQ has gone up. I think there's a catalyst here that is making him retire. you know maybe he got hurt maybe it's a personal catalyst maybe it's a business catalyst you know maybe he doesn't want to invest the you know whatever 50 grand to make the next two years worth of inventory and he kind of runs this thing inventory order inventory order and he goes i don't want to do another inventory order two years running this thing i'm out and that's why he's out of stock um the problem is being out of stock and having basically zero revenue makes this business unsellable right i mean not only unfinanceable right heather but like the obvious yes yes it's both this is both unsellable and unfinanceable yeah so it's interesting also you can kind of see the story of the whole business in the products that he has where he has this custom thing the boomerang kind of looper and the sampler once 199 a piece for the kind of light version and then the flagship model is 350 both are sold out that's clearly a unique product to his but then he started to carry these just oddball like super cheap like almost aliexpress like PA systems, like the very dirt cheap$30,$35 one with just bottom of the barrel thing.

14:20And it's almost like whoever Chinese supplier he was getting to make his flagship product, they called him up and said, hey, well, why don't we throw some of these generic things we got here in Shenzhen for you and like ship them over? And so now he's stuck with that. And it did say that he had$250 ,000 worth of inventory or something. Let me pull it back up, but it was included in the whole deal. Well, you said it right at the beginning. This is stuff he's buying from Alibaba is apparently the only thing he has in inventory. So I'm not seeing one attractor thing about this business at this point.

14:55Well, so he's stuck with, where did it say how much inventory he had? Like they were throwing in all the inventory, but the actual unique product that he has, he doesn't have any inventory of that.

15:08this is how you list a visiting this side list of business people just deal with this business is doing that's the right way to do it uh yeah it said there's inventory but he doesn't actually have any all remaining inventory which appears to be kind of this junk that's what it says here yeah he didn't value it so he just said take all the stuff i have left which is just junk and I'll give you the customer list and show you how to order some more inventory. Basically, that's what this is, right? Pretty much. It's a bunch of junk. So anyway, well. So 10 times, 10 times even though? Is that what we're doing?

15:50Yeah, I don't know.