Begin your business buying journey today

Three main methods to find a business for sale exist:

1. Search: Contact business owners on your own and ask if they are considering selling
2. Brokers: Contact brokers to see what businesses they have listed for sale
3. Aggregators: Go to sites like buybizsell to see thousands of listings

We favor #2, the broker method.

Engaging in your own search is possible, but odds are you will reach unreceptive owners. Even if you get into contact with owners willing to sell, often they will overvalue their business.

Using an aggregator site that lists companies for sale should be your last option. This is the last place every broker puts their deals once they have shopped it around and no one else wants the business. Its skimming the bottom of the barrel.

Using a broker gives you a competitive advantage when negotiating with owners because brokers manage expectations of true business value. Additionally, using a broker gives you first looks at deals before they even become public. You find the highest quality companies in this batch.

That depends entirely on your skillset and expectations of involvement.

From a high level you can think about different business types as:
1. Service - lawn care, accounting, ...
2. Software - anything tech related
3. Manufacturing - creating a product
4. Retail - shops, restaurants, ...

Banks, owners, and every party involved in an acquisition will be testing your credibility to run this new business. Be sure you can tell the story of how this company perfectly fits your skillset.
‍

For transactions up to $5 million, sba 7a financing is available.

Above a $5 million purchase price, more money down at closing is required and acquisitions move toward private equity models.

The funds and the expertise.

Funds. Most small businesses are values at roughly 3x seller discretionary earnings (SDE). So a business generating $300,000 per year is worth around $900,000. If you take the sba 7a route, you need at least 10% down and 15% of the total purchase price liquid in your account as collateral.
- $900,000 * 10% = $90,000 to inject into the deal
- $900,000 * 15% = $135,000 collateral

So in total you would need $225,000 liquid to complete an acquisition of a business generating $300,000 SDE. This is an oversimplification, but roughly how things shake out.

Expertise. In the purchase process you will need several types of professionals to close the deal:
‍
1. Business Broker (recommended not required) - This professional helps connect buyers and sellers, ensuring a smooth sales process. They have experience in valuing and marketing businesses to find the right buyers.
2. Transaction Attorney - This attorney specializes in negotiating business deals your size. They should have diverse legal expertise, covering employment, real estate, and intellectual property laws.
3. Tax Accountant - This expert knows business transaction tax law well. Beyond regular compliance, this should be someone who understands how business sales are taxed.
4. Financial Planner - The financial planner's role is to help you retain as much as possible from the sale proceeds.

1. Overpay - If the business fundamentals are strong and the company has a great outlook, adding an extra seller note is worth it in some cases.
2. Connect Personally - Make a real connection with the owner and win over their trust.
3. Speed - Submit an offer quickly and have everything in place to close a deal within a few days.
4. Get Lucky - Hope no one else submits a better offer.