Chapter 6 · Buying a Business That Was Losing
The price was compelling.
The clock was running.
Sheepey Exotics had thirty-eight cars and losses of about $80,000 a month. The acquisition gave Vijay a national business and very little time to change it.
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After considerable back and forth, we agreed on a price of $1.25 million. I financed it with two specialty loans, one for $1 million and another for $250,000. At the existing rate of loss, I had enough capital to support the company for about two months.
The vehicles were the reason I thought the opportunity was worth taking. Exotic car prices had risen enormously during the pandemic. Some models had doubled in value. A calculation that began with what a car had originally cost and subtracted normal depreciation could produce a very different answer from what that car could sell for in 2022.
Across the fleet, the equity was nearly $4 million after the vehicle loans. That made a $1.25 million acquisition price compelling. I could sell some cars, release money tied up in them, and use it to support the turnaround. I also saw expenses I believed the rental company could do without.
An excerpt from Chapter 6



