ASK HN: Should I buy this successful business?

Since the business belongs to your Father in Law, you want to be sure of a couple of things. First, does he really want to sell the business to you ? It is not very clear from you post so I want to confirm. If you think you can do a better job but he doesn't think so, then it wouldn't matter. Second, if you think he wants a say in it afterwards, you need to discuss and agree on exact role/boundaries for him if he will still be involved. It cannot be like "sell it to me and then we will figure out how we can work together". Don't do that. Instead, have a frank discussion with him and let him know that you either intend to NOT have him involved at all or you can hire him a consultant on demand. But boundaries have to be set.

If you can get these 2 things in order, then I don't see why you cannot buy the business from him considering you seem passionate about this and you have experience in the business already.

I would not buy the business for the exact same reasons you listed in the cons.

What if, after the deal, you make a decision that he wouldn't have made? Or if turns out your skills as an entrepreneur are not what he, or you, thought they would be? That's not something I'd want to discuss with my father-in-law...

Why don't you propose to become a partner? So you can taste what is like to be on his shoes, he can mentor you not only on the industry but, most importantly, on how he prefers to run it. Then if all goes well, you'll buy his part and he could retire or pursue other ventures.

This. Or even an employee/assistant, not a partner. Dip your toes in the water first and see if you'll be successful; don't commit 100% until it makes sense.

A few questions.

First, are you excited (or can you be excited) about this business and the customers (apart from the freedom and money). Do you want to be interacting with these customers for years, because you will be. It's ok if you don't love love love it, but if you hate it, that will be a slog.

What is the exit strategy for your father-in-law? Are you buying it outright, paying him off over a few years, taking out a loan to buy it from him? Will he be hanging around for 6 mos as an employee/consultant?

Do you want to be in the business side? You mention some technical ideas, but as the owner, you might get to play with technology, but most owners I've seen get sucked into the sales side and don't get to do as much tech as they want. Are you ok with that?

What is your best guess at the future of the niche? That obviously plays into valuation and how sustainable the business is? Have you taken a good long hard look at that?

Why is f-i-l selling? Sellers always have more info than buyers, so I'd ask about that.

How does this fit with your career goals? Do you want to improve as a developer? If so, as a generalist (in which case this might be a good move) or as a specialist (in which case this is probably a bad move)? Do you want to work on a team?

Thanks a lot for these good questions!

I am definitely most excited about running a business. The subject of the business is not my passion, but I am quite comfortable with it. When I worked in the business during university, I was in constant contact with the retail customers. Most of the interactions were really normal, some great and occasionally also really bad. Ok overall.

The exit strategy is not decided yet. I would prefer a small deposit and then paying the rest off over the next couple of years. FIL would like a larger deposit and less pay off per month. We would have to find the middle ground. FIL would be available as a consultant for a couple months after the transition. Also he is family so in really pressing situations I am sure he would provide me with advice and a guidance.

Yes, I would like to work on every side of the business. I really love to touch a lot of subjects, also at my workplace.

I guess the niche will still be there in the next 10 years, but I honestly cannot make a prediction about more. The business is built on returning customers/collectors all over the world. I guess it makes a lot of sense to look into it alot deeper.

He is old, he neither needs to nor wants to work any more.

Really, if I take the business, I quit my developer career. I focus 100% on what makes the business better. If it includes occasional development tasks, great. If not, also ok. I would have my developer background as a backup plan in case anything goes wrong. But if I never return to full-time developing, I am not too sad about it.

Thanks again for your questions, they got me thinking in some different angles!

Maybe unrelated, but it's never a bad opportunity to link to one of the patio11 post: "What I Learned Selling A Software Business" https://training.kalzumeus.com/newsletters/archive/selling_s... HN discussion https://news.ycombinator.com/item?id=11347006 439 points | March 23, 2016 | 84 comments

And a side question: Do you like music?

Thanks, will check it out later today. Read a lot from him already.

Not more than the general person really.

This is a relationship question. Your father-in-law wants to make sure his daughter (if I may assume...) has a husband with a stable life, and he wants a reason to maintain an active role in her life going forward.

Weird that your post didn’t mention your wife at all. She might be the most important part of this question. How does she feel about this offer from her dad to her husband? Have you asked her?

What does your FIL think of your life now – does he think it’s stable? Is he possessive? Is this a way of putting you in his debt so he can have a lever to manipulate you with? How will he react if you decline his offer?

In another timeline, if you were single and never met this guy or your spouse, would you have even let the conversation get this far? Are you looking at the opportunity through rose-tinted glasses?

I’d lean toward no... it’s not worth mixing business with family.

As we know, the music business(and content businesses in general) have seen dramatic changes in how they work and their profits in the past 5-10 years. I would study this business to see how it will be able to project it's current model 5-10 years to the future and how your plans would impact this future to make it more profitable. A mutually profitable transition is needed. His ideas should be analyzed and assessed as to their chance of success, same with your ideas to make sure you have a long term plan. No battle plan survives contact with the enemy - and there are many enemies in the content business, esp patent trolls. Has he ever been trolled? what happened there? Good luck

Yes, as another commenter made me realise I have to understand more about the niche and its future. So thanks for underlining that again!

Not been patent trolled yet, it is not really possible. But there have been multiple incidents in a similar vein. Counterfeits appearing. Inventory worth almost $80k was stolen over a period of some weeks. The company survived these incidents as it is broadly positioned.

Thanks again for your reply and good questions

"You'll never get rich working for someone else" is an old adage...

SO if you're unhappy, and would have the support of you FIL when you need it, and you have faith in your ideas for it and its current sustainable success, and its not going to wipe you out financially - then I would jump on that.

I have close friends who have a VERY successful cannabis business making millions per month - and they high a lot of their family.

>>and they high a lot of their family.>> If I had a cannabis business, I am sure I would have a lot of high family....

It would not wipe me out but set me back significantly if I screw it up somehow. But that is a risk I would be willing to take on generally.

Thanks for your reply, nice typo there :)

I say do it. A lot of good fortune in life is about contacts.

I am 50 with a sideline which makes a low five figure ARR. I can understand why someone older may think of selling their business.

Do it, new jobs will always be there, this seems like a great opportunity to flex your entrepreneurial skills and create value.

I'm very interested to know what the business is as well!

Why is he selling?

It might be as simple as him wanting to pass on the torch. If it is then go for it. If not then think about it.

Go have a heart to heart with him.