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Buying Company At Auction vs. Starting New


HareRumpler

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Quick question for those long-time org and business owners out there. Is there an obvious advantage to buying a company via auction (even if you get it or $0 bid) vs. starting one new?

 

I figured it was for either the potential hype of a company if it has some developed some already, a positive balance sheet if it has one or possibly just to keep a company brand intact and going? Other than that, if the company doesn't have a balance above zero, doesn't have any or much hype developed...there wouldn't be much advantage of starting your own fresh and new right? Or am I wrong?

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Some companies have tons of cash left over

 

In the case of a good gym it’s better to rebuy than to build as hiring can be very expensive

I had considered the first point. The second was something I hadn't considered so that's a great point to make.

 

Other than if the company has cash left over or hype already established, I'm wondering specifically about Nutrition/Clothing companies too. I guess the same applies as managers, they may have stock on hand to sell still as well that gets you ahead a bit...then you can "phase out" the old stuff if you want once it sells off?

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For a nutrition company, it really makes the most sense to buy one as the cost to research a top quality product is very high and you will probably never get you money back. IIRC a 160 product is 1.3 million so it will take a long time at 300.00 to get your money back. If you buy you can order any products they have researched, sadly if they researched a 159 you can't add to it to make it a 160 you have to start over and research the full 160 amount and cost.

 

Clothing company, you will get there inventory and designs and can order more without having to actually design more clothing.

 

As long as the company doesn't have debt, there really isn't any downsides.

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For a nutrition company, it really makes the most sense to buy one as the cost to research a top quality product is very high and you will probably never get you money back. IIRC a 160 product is 1.3 million so it will take a long time at 300.00 to get your money back. If you buy you can order any products they have researched, sadly if they researched a 159 you can't add to it to make it a 160 you have to start over and research the full 160 amount and cost.

 

Clothing company, you will get there inventory and designs and can order more without having to actually design more clothing.

 

As long as the company doesn't have debt, there really isn't any downsides.

Awesome, great explanation on those two. Appreciate it!

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