Buy a Business

Before buying beginning the process of buying a business, do a deep dive into your personal financial situation, which will be scrutinized at a very high level by buyers, brokers, and banks. At this time, it is best to identify how much you want to invest into a transaction. This should include not only the money you intend to invest, but if working capital is necessary, how much you need for this (some of this can come from a lender), and how much additional “float” you want available should the business not be able to pay you in certain months. Our recommendation is 2 years of float (based on your current cost of living). Once you know how much you are willing to invest, then we can help you identify the best price points for you.

When you start looking at businesses, those involved in the process will start looking you up. They will likely jump on your LinkedIn and other social media pages to get a better feel for “you”. Your background, history, past jobs, academics, experience, who you follow, how you communicate in social media, etc. The people looking you up will include the business brokers involved in the transaction, any buyers you are introduced to, any lenders you are asking to lend you money to acquire a business, and any lawyers representing the seller. So, be sure that you have cleaned up your profiles (and at the very least, have a strong LinkedIn profile in place as this is the page most will focus on when looking you up – consider hiring a consultant to help you with the process of creating a super strong LinkedIn profile if you aren’t good at self-promotion).

This is a big decision that should be made up front before you start researching companies to buy, especially first-time buyers. You need to decide if you are looking at businesses that will require your daily management, full time (owner operator), and/or whether you need a full operations and management team in place to handle all aspects of the operation after closing (investor transaction). These 2 very different acquisition strategies weigh differently on you and can determine your success. Our advice … focus on being a hands-on, owner-operator buyer as that is what business owners and banks what to see in a buyer. Once you become fine-tuned in business ownership, it might start making sense to switch to a shared services model and/or allow a team to start handling a lot of your daily activities so that you can focus on growth.

Once you have your finances and profile in order, and you know what kind of buyer you want to be, now it is time to get financing in place. This is NOT something you do AFTER you begin the process of looking at businesses for sale. Why? Because business brokers know that 90% of all people that look at a business for sale will never actually buy one – so the smart brokers won’t even respond to you unless you are a cash buyer or you have a pre-qualification letter from a bank or lending partner. This is for deals of all sizes and is the case for all buyers that require a bank to finance their transaction.

Much of identifying your deal size will be ferreted out while you are going through the lender pre-qualification process. Since that will set the ceiling for you, you can then decide how small you want to go. That is really a personal decision based on your lifestyle goals and requirements, whether you have alternative income, how much additional liquidity (float) you want to keep available, etc. We recommend that you identify this target range and stick to it as it will help you focus and not waste your or other people’s time on deals you’re unlikely to actually close on.

As a Website Closers affiliate, we have joined forces to offer a considerable amount of value propositions to our Buyers Club members at a very low monthly cost. These include early looks at pre-market deals, preparing you financially for your acquisition, holding webinars and other events to help our first time buyers become educated on the buying process, and much more. The goal of the Buyer’s Club is to get you behind the wheel of a deal in as short a period as possible based on your own buyer criteria. Inquire with us about this opportunity as it can really accelerate your entrepreneurial plans.

Once you have become pre-qualified for a certain level of funding, understand your own goals, and have your house in order … then it is time to start looking at transactions. We recommend that you find one deal that you like and ask the broker on that listing if you can work with him/her on this deal and any future deals if the first target doesn’t work out.