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Finding a business for sale involves research, networking, a serious commitment of time and resources for due diligence, and above all careful consideration. Whether you are thinking about buying an existing business as an alternative to creating your own startup from scratch, there are many important factors to consider.  

Follow our a step-by-step guide to help you find a business to buy:

1. Determine Your Business Acquisition Criteria:

  • Industry – Identify a few industries that interest you and align with your skills and experience. Business owners like to sell their businesses to people who have demonstrated success in their industry or related business.  Doing so helps business owners feel more comfortable with the buyer and their ability to succeed post-sale.
  •  Location – Decide whether you want to buy a business in your local area or are open to relocating yourself and your family elsewhere.  If you’re willing to move to a new geographical area, you may have many more options and greater opportunities to explore.
  • Size and Scale – Consider the size of the business you’re interested in, whether it’s a small local business or a larger enterprise.  The size of the business you choose to pursue will determine how much money you will need to succeed, the type of business broker you will work with, as well as the costs you will pay for the professional services you’ll need to close the deal.  
  • Financial Requirements – Determine your personal investable capital budget and financial capability for borrowing in order to  purchase the business you desire.  If you intend to solely pursue the business acquisition, your existing capital and personal financial credit records may limit the size of the business you may buy.  Alternatively, if you are open to having other equity partners, your personal capital and credit records will be less important, assuming the business you acquire is profitable enough to substantiate outside investors and other forms of financing.  

By clearly determining the criteria for your business acquisition, you will be in a much better position to take the next steps.

2. Conduct Industry and Market Research:

  • Research market trends, competition, and the overall health of the industry you’re interested in.  Michigan State University has gathered a great list of free resources you may use to learn more about your targeted industry and its market.  Determine whether the business you are considering is in a growing industry.  Is the industry saturated with competition or suffering from ongoing supply chain issues.

3. Search for Businesses on Sale and Network:

  • The size of the business you intend to purchase will determine where you should search for businesses on sale:
  • For businesses valued under $5 Million, you’ll most likely be working with a Business Broker who represents small, local businesses.  These businesses for sale are referred to as ‘Main Street Listings’.   You will find these listed businesses for sale on websites such as BizBuySell.com or BusinessMart.com.  If you’re interested in an online, web-based business, WebsiteProperties.com is a great source.  Or alternatively if you are looking for businesses with an international footprint, BusinessesForSale.com specializes in such listings.
  • Main Street listings are typically represented by Business Brokers.  We always recommend working with a trained, licensed and/or credentialed Business Broker when buying a business.  
  • If you’re interested in buying a business with a value between $5-to$50 Million, you’ll be working with a Business Intermediary in the Lower-Middle-Market.  In certain cases, you will be able to find the businesses they have been hired to sell on certain businesses for sale platforms.  In other cases, you will need to find such businesses through networking.  And that’s because not all Lower-Middle-Market Business Intermediaries utilize online listings as a marketing tool.
  • Regardless of the targeted type or size of the business you’re seeking to acquire, it’s wise to attend business networking events, industry conferences, and seminars to connect with potential sellers, brokers, intermediaries and professional advisors.  It will be very important to network with others who help business owners sell their business.
  • Let your personal and professional networks know that you’re looking to buy a business and the industry and business size that fits your circumstances.

4. Engage with Business Brokers:

  • Business brokers have access to a range of businesses for sale and can assist with the buying process.  Business brokers and intermediaries alike can help match you with businesses that fit your criteria and guide you through the business acquisition process.  They will also be a vital member of the team of professionals you work with as you make an offer by submitting your Letter of Intent (LOI), conduct your due diligence, finalize your financing and close the deal.  Business brokers and intermediaries are also very accustomed to working with M&A attorneys, CPAs, accountants and other professional business advisors to ensure you’re making a sound investment.   

Your team of professional business advisors should help you negotiate not only the final price you pay for the business, but also the stock or asset purchase terms, lease assumption terms, financing terms, etc.

If you take the time to thoroughly consider the criteria for your business acquisition, undertake industry and market research, search for businesses online, network with others and engage with a professional business broker or intermediary, your chances of success in finding a good business to acquire will increase tremendously.

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