Key Points From the Interview
oday's guest was 40 years old when he looked over at his wife and said of his corporate job:
"If I do this for 12 more months, I'm gonna be dead."
Happily, Marvin Karlow avoided that fate, and instead partnered with his best friend to do something entrepreneurial.
What that something would be, they didn't know at first.
But it ended up being the acquisition of a $2m powder-coating business in Tampa.
They bought it in 2011.
8 years, 1 acquisition, and a lot of hard work later, they exited the business to a public company for $21 million.
A lot of themes to listen for in today's interview with Marvin:
- The value-unlock of buying a distressed business. Their one acquisition was a business losing over $50k per month on $5m in annual revenue. They bought the whole operation for $400 (you read that right) and turned it around. Now, this is not a suggestion to go out and try to do the same. Turnarounds are not for rookies. But if you pull it off, the value creation can be huge.
- QSBS, aka Qualified Small Business Stock, aka Section 1202 Exemption. This should be on your radar; it could mean an extra million dollars in your pocket at a liquidity event.
- ROBS. Marvin tapped his 401k for the initial equity.
And finally, good timing paired with hard work. We often hear that the best outcomes in business are down to timing. And this is true.
But you also have to be prepared when fortune smiles upon you. Marvin and his partner had worked hard to do all the things: put in technology, improve operations, grow sales, turn around a hemorrhaging business.
They first spent years creating real value, and then capitalized on that value by selling at a premium multiple to a public company who just happened to be looking for acquisitions in their market.
Real value plus good timing.
Please enjoy this conversation with Marvin Karlow, former small business owner and now M&A advisor.
