First…about the investor. This was a software engineer in his 30s who had made a good amount of money from cashing in stock options. He was very concerned about the stock market's ups and downs and wanted some diversification. He also wanted to stay out of high tech and the Internet, which is something we see a lot with people in the high tech industries, mostly as a way of intellectual diversification.

His home had lost a ton of its value, so he was not interested in real estate, and bonds weren't paying enough money. He had proposals for all kinds of interesting investments like loans to startups, precious metals and all kinds of other very "interesting" stuff.

We determined that the number he was comfortable with investing was $200,000, which was a substantial number but not his entire savings. He was also hoping for a return in the neighborhood of between $20,000 and $50,000 per year, or 10% to 25%, a great return these days.

We look at businesses every day. We have brokers who see businesses and shoot them over. I loved this business from the first time it came across my desk.

The product is water. This business has a retail store that sells water, and delivery routes that sell water and ice. Here are the reasons I liked the business:

1.  Longevity. It's been around for 20 years and successful.
2.  Owner is moving. The owner has a sick relative and has to move out of state. This means the business has been neglected and there's an upside when more TLC is applied. It also means there is room for negotiation.
3.  It's a great product. There is no recession in water delivery. And there is a worldwide water shortage that is getting worse (check Google for yourself).
4.  There is owner financing. This is one of the rare occasions we approve of leverage.
5.  The owner is currently absentee. The owner hasn't been working the business, so the numbers reflect a business being run the way we would run it.