For most of its 17 years, Imaging Path was a successful IT services contractor that peaked at more than $16 million in sales. The situation at Imaging Path got worse when Tansom’s bank decided to pull its financing. Tansom decided his best option was to sell his business – but who would buy a money-losing company?
Imaging Path founder and CEO Corey Tansom kept a close eye on his business until, a few years prior to its sale, Tansom went through a divorce that caused him to spend a lot of time away from the office. Tansom was distracted, costs ballooned and margins shrank. Imaging Path started losing about $500,000 a year.
Tansom was able to sell his money–losing business for more than $10 million because he had figured out his “Rembrandt in the attic” – the one part of his business that would be irresistible to someone else. Figuring out if you have a hidden asset that will make your company more valuable than just a multiple of EBITDA is something we’ll do together after you complete your Value Builder Score, which you can do now here – for free.
About Corey Tansom
Corey Tansom is a 58-year father of three. He was founder and CEO of his IT services contracting business, Imaging Path, and has retired since its sale to Loffler.
Having quit Minnesota State University, Mankato, after less than three months, Tansom began on a series of retail and sales jobs that would eventually lead to the establishment of Imaging Path. He began in a local hardware store, and then a liquor store. From there he responded to an ad recruiting credit card terminal sales representatives. Tansom got the job, and didn’t sell a single unit for the first three months, but then finally began to get the hang of it.
After this initial success, Tansom started his first company. He ran it for about two years before selling it for $50,000 with about $20,000 in debt. In 1989, following the close of his second business, Tansom landed a job selling copiers, and so began the journey that would lead him to Imaging Path.
Tansom quickly advanced within the company, but when it seemed the company would be sold he switched to a smaller dealership that, as it happens, would eventually grow to become the company that bought up Imaging Path 18 years later! He helped grow sales there quickly, and soon after realized that it was time to go into business for himself.
Click to Tweet: Why was this money-losing business worth $10 million?
Some Highlights Of The Show
Business: Imaging Path
2:07: “Started as a copier company, and over the year it morphed into a technology company.”
3:01: “Copier dealership had to embrace the new changes along with the shrinking margins due to competition. It was a new way to find more margin and more revenue.”
3:53: Selling at about $16 million in revenue.
4:07: “We were doing a little under $10 million [in] recurring revenue.”
Click to Tweet: How #recurring #revenue garnered this #entrepreneur a $10M #valuation in this #acquisition.
4:40: The triggering point.
9:01: “We had a lot of changes to make to survive… The operating expenses were out of whack.”
11:20: “Our sales were strong which was the good part of the company; again, having $9 million in recurring revenue didn’t hurt either.”
12:50: “I was poor at selecting CFOs.”
14:50: Click to Tweet: “I knew it was worth well over $10 million, even though the bottom line was poor.”
15:04: “I knew our only way out of it was a strategic sale.”
15:42: Selling a branch of the business and closing the sale within three weeks.
16:45: Selling at one time the service contract revenue.
18:30: “A little over $17 million in sales in 2013.”
20:00: Talking factoring as the company runs into cash flow problems and their bank pulls financing.
24:12: “[Loffler] calls saying, ‘We would like to talk to you again.’”
25:00: A saving offer from a friend.
27:12: Click to Tweet: Learn how a projected pro-forma could help you get successfully acquired.
30:30: “I get a portion of money over time to not compete with them. The non-compete was actually for 10 years… I knew I wasn’t going to go back into the industry, so I had no problem signing that.”
31:35: “They acquired the cars and certain assets and contracts that we owed money on.”
32:01: “Those are things that, if you miss them, they can cost you a lot of money.”
32:00: “He didn’t want an interest rate; he didn’t want a contract. I had an attorney write up a contract and I included 7%.”
33:12: “For those who are listening, who have their backs up against their wall … a tear came to my eye when he offered me the money. Paying him back, I felt very in debt to this guy.”
34:00: “Not having a hobby, it’s been hard.”
34:48: “When people ask you what you do, and you say you’re retired, people look at you funny at the age of 58.”
Click to Tweet: Why projecting what your business would do in the buyer’s hands matters to your #valuation.
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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.
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