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So, you have decided that you want to buy a business. Maybe it was the new SBA incentives that attracted you, a friend that had recent success, or maybe you even heard about business buying opportunities on a podcast (like The Deal Board?) And now the search begins. I want to address today not just how to find businesses to buy but also how you can make the search efficient for yourself and not spend hours upon hours scrolling through business listings.

 

Your Criteria
It’s important to understand your criteria for a business to buy when you start to search for businesses for sale. This helps narrow your focus and weed out companies that you would end up not actually closing on. Here are some things to think about

  1. What is your budget?
  2. What industries are you attracted to?
  3. Where geographically are you willing to work?
  4. What are you willing or able to do in a business (or not)?

These are questions often a business broker can help with as well in giving you some guidance around how businesses are priced and what is actually available.  Once you have these determined, you can find businesses for sale in three major places:

 

Business for Sale Websites
There is a plethora of business for sale websites out in the world. You’ll want to register yourself as a buyer and sign up for listing alerts in your search criteria on some, but not all. There are also specialty websites for micro acquisitions and e-commerce acquisitions, here are our recommendations:

 

Business Brokers and Their Networks
Business brokerage offices can be talking to hundreds of entrepreneurs a month to see where they are at in their exit process. Knowing the right business broker or investment banker in your target geography or industry is critical. It’s important to know that most business brokers (who typically represent companies priced $10 MM or under) are generalists, meaning few specialize in one industry, they are more niched in on the size of the deal and geographic location. However, investment bankers (who represent companies priced over $10 MM) are usually focused in 1-3 industries, but geographically diverse.

Often brokers and bankers will receive a business for sale and already have buyers lined up in their database ready to go. If you are one of those buyers, you will have first shot at deals before they go to market!

 

Industry Associations and Contacts
If you are already involved in the industry you want to make an acquisition in, you likely already know the players. Make it known that you are in acquisition mode and you never know what opportunities will land in your lap! If you are not involved in your target industry, you can join the industry association, attend conferences and let people know that you are a new player that is in acquisition mode.

 

What doesn’t work
So here are three ways that you can actively draw opportunities to yourself, but what doesn’t work? I hear a lot of buyers trying to go it alone: prospecting business owners through cold calls, direct mail, and showing up on their doorsteps. This often does not work. First, these business owners are usually already been solicited in these methods by the business brokerage industry and larger buyers like Private Equity Firms and Corporate buyers. Getting a single solicitation from an unknown buyer is likely not going to receive a call back when they have options with larger buyers or networks. It can also prompt them to bring the business to market and create competition for you. At the end of the day, it can yield a result but it’s like searching for a needle in a haystack – and you are trying to be efficient!

I hope this short post gave you a starting point in finding businesses for sale. If you are active in the process, we recommend you register as a buyer in our Buyer Match program so you can be alerted to listings for sale across the country. If you enjoyed this article, and want to participate in our Business Buyer Education Program, learn more here. We start classes every other month and cover the entire business buying process including providing toolkits like business valuation, due diligence checklists, and transition plans!

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