On Monday November 27th, I bought Anderson Investigations Corporation for $390,000. For those looking to buy something to replace their full-time job, most people would say this is too small. And they’re mostly right, but let me tell you why I bought it.
Anderson Investigation is a process serving business. I had no idea what process serving was until I read the description on BizBuySell (yes, I found this on the most common broker site there is). For those that don’t know, process servers are those that serve legal papers for divorces, bankruptcies, summons, etc. There’s two main categories of papers to serve: criminal and civil. This company only does the civil side, and leaves the criminal papers to Constables. Anyways, the listing had the asking price of $450,000 and with revenues of $305,000 and cash flow of $165,000.
For the vast majority of my time searching, I was only looking at businesses between $800k - $1.5M. This provided me the room to take home a healthy paycheck even after making the loan payment. The only reason I lowered my filters on my search, is because at the time I couldn’t find any other businesses that fit my criteria within that price range.
Here’s what the listing said:
“The business is a process server delivering court documents such as summons, complaints, garnishments, trustee sales, subpoenas, bankruptcies and notices to pay etc. The business also does skip tracing, individual, property, motor vehicle and asset searches. Additional services include copying or filing legal documents within local, state and federal courts. The business also synchronizes process service with other servers in and out of Utah to serve documents across the United States. The future of the industry looks great. The business revenues continue to increase. With the current economy and the increasing interest rates the business is experiencing more court documents needing to be served than ever before."
The thing that caught my eye is that the subtitle of the listing said Retirement sale and the multiple looked to be less than 3x earnings. The listing itself was nothing special, but intriguing enough to request information on it. After a quick analysis, I learned it was a 35 year old business being sold by the founder and it was resilient, if not thriving, during recessions. And when I heard that, I knew I had to learn more.
Here’s the thing, I have been working in the crypto industry for the last 7 years! To tell you that I was worn out by the volatility was an understatement. I had been laid off twice from crypto startups that were low on cash. Plus, I figured there’s eventually going to be a recession in the next year or two. So priority number one, was figuring out how to ensure some job security and consistent pay when a recession finally hit.
Here’s the numbers:
Purchase Price: $390k
Projected monthly Cash Flow: $12k
My projected monthly salary: $5k
Monthly Debt payment: ~$5k
I am taking a significant pay cut to buy this business and for the first several months its like I bought a job. But why? Besides the fact that it is predictable income no matter what the economy does, my long term goal is to do a roll up of several of these types of businesses. Plus, I think there’s some low hanging opportunities to automate and grow the business by 50-100% over the next year.
The other reason this business made sense for me is because of my current financial situation. As you are well aware, crypto is more than 50% below its all time high price. Being in crypto for as long as I have, you won’t be surprised to know that I have the mass majority on my assets in crypto and I really don’t want to sell any of it right now. And at the same time, since crypto is such a high risk / high reward investment, I felt like balancing it with a very low risk / lower reward business made sense.
Now, the last thing I want to say about this decision and process is that this has been primarily made possible from a lot of work on my mindset. I don’t think it’s any coincidence that I was finally able to close on this after a year of intensive working improving my mindset. I’ll share more details about that in a later post.
Thanks for following along and feel free to send me questions of things you’d like me to share about my journey of buying and running a small, unsexy business!
Until next time!
Spencer