How to find a business to buy

If you want to buy a business, whether it is a small business like a restaurant, laundromat, e-commerce store, or a franchise, or even a large enterprise like a factory or firm, you have options You can search public listings and online resources, network within your community, or hire the services of a business broker who specializes in connecting buyers with sellers and can possibly even approach businesses that are not currently for sale to see if they are open to having a conversation. 

Key steps to finding a business for sale

The first and arguably most important step to finding a business for sale is to set your personal objectives. This is where you define the type of business you want, its financial characteristics, the industry to focus on, the lifestyle associated with running the business, the amount you wish to invest, and the types of financing arrangements you are looking for. Knowing all of this in advance will reduce the risk of pursuing opportunities that don’t suit your needs and increase the odds of finding a business that you will enjoy running, and guide you towards lasting success.

Once you know what you are looking for, the next steps are to begin your search. Tap into your network of personal and professional contacts and potentially retain a business broker to help you find a business that matches your objectives. 

Using a business broker

A business broker helps buyers and sellers of businesses find one another and complete a transaction. They can assist with your search, support the due diligence process, and help you agree on a fair purchase price. 

A good business broker can help you set your initial objectives, and might even uncover industries or opportunities that you never considered before. They can often source businesses for sale that are not listed in any public place, or even reach out to business owners they know to see if they’re open to selling.

A business broker can help you evaluate a potential business to buy to make sure you are going in with eyes open and are able to negotiate a price that is fair and reasonable. And when it comes to sealing the deal, they are familiar with the paperwork, licensing, permits, financing, and rules and regulations that need to be taken care of.

Contacting lawyers and accountants

Lawyers and accountants who deal with business owners can be a good source of intelligence about companies that are either for sale or contemplating putting themselves up for sale.

Going direct to banks

Bankers who deal with entrepreneurs are another potential source of businesses for sale. In some cases, a banker may be motivated to assist business owners with selling in the hopes that they will invest the proceeds of the sale at the bank.

Online marketplaces

A quick Internet search will turn up listings and marketplaces of businesses for sale. However, because this is generally an unregulated forum, extra caution is warranted. Be prepared to conduct thorough due diligence on anything you find online.

Commercial real estate agents

Commercial real estate agents are often in contact with business owners, who are usually the owners or the tenants of commercial properties. Some commercial realtors actually double as business brokers and can assist you with scouting both properties and businesses for sale. 

Bankruptcy trustees

Bankruptcy trustees can be an interesting resource for businesses for sale. If a good business has failed due to bad management, you might find a bargain business that you can bring back to life.

What you will need to know about the business for sale when sourcing funding

If you go to a bank or other financial institution to borrow money for the acquisition of a business, here are some questions that you should be prepared to answer:

• Is the business profitable?
• How has it performed financially for the past several years?
• Why is the business for sale?
• What is the purchase price?
• What assets will you be acquiring for that price?
• What is your business plan?
• What is your relevant experience?
• What other capital might you need?

What evidence is required?

Most lenders will want to review the financial statements of the business. If the business is on solid financial footing, this will make it easier to borrow. If you can show evidence that you are acquiring physical assets such as property, equipment, vehicles or inventory, this can provide the lender with further confidence and strengthen your position as a borrower.

If the business is not performing well or it does not have tangible assets that it can pledge to the bank as security, your ability to persuade them that you will be a success will be essential. A  resume with relevant experience and a business plan that details how you get the businesses into a profitable position can help in this instance.