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Friday, August 05, 2005

By Steve Mooar

Manhattan, NY, August 5, 2005 – This article defines the term Jump Start and provides sample projects. It is Part 1 of a 5 part strategy series on the Jump Start. If you missed the introduction that was published on August 2nd it can be viewed at http://bizplanhelp.blogspot.com/2005/08/its-not-startup-its-jump-start.html. Part 2 will cover the advantages of the Jump Start over the Startup

Jump Start – an entrepreneur forms a new company by acquiring another company. The word “company” is used loosely in that it can be an active company or division or even the assets of a shuttered company or division. By purchasing existing assets the entrepreneur gets a jump start over a pure start up with a time advantage as well as a cost advantage since typically the assets are purchased at a discount.

Sample Projects
I have been involved in a few Jump Starts over my consulting career and they have been very successful. The first Jump Start that I was involved in was for a mid-market private equity firm. The project involved buying assets from the household cleaning division of a $1 billion Pharmaceutical company and forming a new company. The assets purchased in the transaction were three brands, intellectual property, and a manufacturing facility. All three brands were active, so even though this Jump Start had many of the same issues as a startup, having to setup processes, personnel, and systems, the business had revenue on day 1.

Another Jump Start that I worked on involved purchasing assets from an $8 Billion Paper Products Company. Unlike the last sample, the assets had been retired by the Paper Products Company 6 months prior to purchase. In the transaction, the entrepreneurs purchased a brand, intellectual property, and tooling for the product line. The advantage to the entrepreneurs that purchased the assets is they now had an internationally recognized brand with strong brand awareness in the United States as well as the tooling to make the products. Within one month a new company was formed around the purchased assets and the new company began taking orders and producing products. By purchasing the assets, the entrepreneurs saved 6 months to a year in startup costs as well as saving millions of dollars in tooling costs.

About the Author
Steve Mooar has over 10 years experience in Operations and Information Technology and has worked on numerous Startup and M&A projects. He is the president of Eagle Strategy Group, which provides Strategy Consulting Services to small and medium sized businesses. Eagle specializes in developing strategic solutions in Operations, Information Technology (IT), Startup, and Merger and Acquisitions (M&A), as well as provides interim management support. For more information go to www.eaglestrategygroup.com.

1 comment:

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