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Old 02-22-2013, 08:37 AM
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Air Randy Air Randy is offline
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I think I addressed that above i.e. they were stretched thin and over committed. However, that alone would not have resulted in them going out of business once acquired by LMH. The addition of resources and managing new orders would have got that in order pretty quick. Even if the took on debt as part of the acquisition they did so with their eyes open and it was factored into their business case.

I think it was more a case of trying to turn your hobby into a business. They tried to scale it up too fast and burdened it with high facility costs, gearing up for mass production of parts and adding lots of people at higher wages. The little guys can survivie with a niche type business like this because they can adjust so rapidly to the ups and downs of the business. Once the business gets larger and more structured you have lots of overhead to support so you have to maintain the cash flow and margins to support it ongoing.
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