Business Acquisition: Where Do I Start?
There are many advantages to acquiring a small business versus establishing a business from the scratch. But how does a buyer find small businesses for sale?
To start, there are a number of Websites on which businesses available for sale are advertised. Some of these include:
These Websites, and others like them, allow prospective Buyers to search through thousands of businesses by city, state, industry, price, and more. The advantage? Think of your search as “window shopping”—you can begin to get an idea of what’s on the market and what are viable opportunities for you. The disadvantage? There is a lot to navigate once you find something you are interested in, and if you are a first-time Buyer, you may not know what to look for and/or ask for.
Here are three tips to set you on the path of navigating your search in a way that will be productive and help you reach your goal of finding a viable opportunity:
- Begin with the end in mind—make sure you have a clear idea before you start searching of what your criteria is. Some questions you can ask yourself are, How much do you have available in liquid capital? What is your timeline for the purchase? Will you need additional financing? If so, is that additional financing from a bank or from a Seller? What industries am I most interested in? What city do I want the business to be located in? What do I realistically require as an annual net profit from the business? These questions will help you begin to formulate a targeted search.
- Be prepared to sign a non-disclosure agreement (NDA) and provide a personal financial statement (PFS) before you receive any information about the opportunity you are inquiring about—yes, that even means the name and address! Remember, when you pursue an opportunity, you will more than likely be receiving highly-confidential, proprietary information about that business, which is why you will be first be vetted. You want the person representing the deal to know you are serious. Set yourself apart by being prepared and by respecting the confidentiality of the opportunity.
- Once you have inquired about an opportunity and have returned the NDA and PFS, you should receive additional information on the opportunity by means of a confidential business review (CBR) or confidential memorandum (CM)—both names for what are ultimately business profiles. The profiles will outline the various aspects of the business, the opportunity, and the deal terms. The CBR/CM will also most likely include pictures of the business to help give you an idea of what it consists of physically. You should use this opportunity to review the profile to help you determine if is an opportunity that possibly fits your criteria. If it is, then your next step would be to contact the Agent representing the deal to either schedule a conference call with the Seller or schedule an in-person meeting with the Seller, a showing.
Though these three steps are just the beginning of the purchase process, they should certainly help you move in the right direction. To explore businesses for sale in Florida or to get help with your business purchase process, contact Terri D. Sherman, PA (Broker: Florida Business Exchange, Inc.) at 888.925.5055 x 207 or feel free to email by using the Contact tab from the menu. We are happy to help you discover more ways to “mind your business today”!