Session #3: Introduction to Search
Where to Find a Business for Sale
FINDING A BUSINESS FOR SALE
Introduction:
It’s the most frequent question we receive:
“$7 trillion dollars’ worth of businesses to be sold by 2030… but where on earth do I find one!?”
Our goal throughout the next three sessions of this course is to answer this question, providing nearly all the tools and tactics you need to begin sourcing high-quality businesses through a variety of channels.
Welcome to the third session of this free business buying masterclass.
Thanks for coming back!
Part One — An Overview of How to Find a Business for Sale
Honestly folks, there’s not much to it:
Establish Your Criteria
Search Listing Sites
Network with Business Brokers
Source Off-Market Deals
Let’s examine each step…
Part Two - Establishing Your Criteria
The first stage in the deal sourcing process is arguably the most critical, but often the most neglected.
You need to identify what type of business you want to buy.
Why is this so important?
For starters, you’re not going to get traction with brokers and sellers if you don’t communicate a message of seriousness.
The marketplace for buying and selling businesses is crowded, and brokers may be skeptical until you show that you (1) are serious about transacting and (2) have the capacity to do so.
Having a rock-solid “search thesis” (i.e., identifying what type of business you’re trying to acquire and why) is an excellent way to instill confidence in brokers and sellers (the gatekeepers).
Many first-time buyers often claim they are industry and geography “agnostic,” and instead list intangible business and financial criteria such as earnings ranges, margins, etc.
While this might suit you personally, it won’t instill the necessary level of trust and confidence in the gatekeepers to advance you to the next stage.
Further, understanding the type of business YOU genuinely want to purchase and operate will save you time and lead you to a business that you’ll find fulfillment and success running.
How do you figure out what kind of business you want to buy? Look within!
Here are some sample questions to ask yourself:
What do I enjoy doing?
What experience do I possess that’s transferable?
In what type of environment would I flourish?
Where am I willing to relocate and live? And perhaps more importantly, if you have a family, where are they willing to relocate and live?
What kind of employees am I capable of managing (e.g., white- vs blue-collar)?
What size of a business am I capable of operating?
You should also spend some time conducting market research to evaluate and decide the types of businesses that you believe holds growth and other potential.
Here are some sample questions to ask about the target business type:
Is the industry growing, stable, or in decline?
What is the competitive landscape (fragmentation vs major players)?
How does a business of this nature acquire customers?
At what multiple do these businesses trade at?
How capital-intensive is the business?
These questions are merely illustrative.
The takeaway is: do a deep dive and figure out what you actually want to buy!
This process should not be linear, and you’ll probably refine it periodically throughout your search as you sign NDAs, talk to sellers, review CIMs and learn! That’s a good thing.
Part Three - Search Listing Sites
The first (and most obvious) place to look for businesses for sale is online listing sites.
These websites have made it increasingly easier to find a variety of businesses that fit your investment or search thesis.
Here are a few key players:
BizBuySell
BizBuySell is one of the most widely used platforms for buying and selling businesses. The website is user-friendly and facilitates an easy browsing experience. It's the place where you can find an array of businesses - from niche startups to multi-million dollar establishments.
For instance, consider a listing for an awe-inspiring business nestled in a beautiful Colorado mountain town:
This business boasts $1.1 million in earnings and is listed for a cool $2.85 million. If mountain life appeals to you, and you're ready to dive into the world of business ownership, this could be your golden opportunity.
LoopNet
LoopNet, although more known for its commercial real estate listings, also presents a wealth of incredible businesses for sale. The platform is user-friendly, making the buying process as seamless as possible.
A fantastic example from this platform is a marina business located in Key Largo:
If you're a fan of stunning beaches, crystal clear waters, and world-class fishing and diving, this business offers a lifestyle many can only dream of. Plus, the pun is undeniable - your friends will indeed be salty when they see your business location!
A Full List
The following is a full list of potential business listing websites.
BizBuySell (https://www.bizbuysell.com)
LoopNet (https://www.loopnet.com)
Flippa (https://www.flippa.com)
Acquire.com (https://www.acquire.com)
BuyAndSellaBusiness (https://buyandsellabusiness.com)
BusinessforSale.com (https://www.businessesforsale.com)
Daltonsbusiness.com (UK) (https://www.daltonsbusiness.com)
FranchiseDirect (https://www.franchisedirect.com)
Business Mart (https://www.businessmart.com)
Part Four - Network with Business Brokers
While online business listing platforms can provide a wealth of information and opportunities, another effective method of finding businesses for sale involves networking with business brokers.
Business brokers often get a bad wrap, but whether you like it or not, they can offer a wealth of industry insights and often have access to a range of businesses that never get listed publicly.
Business brokers are also particularly useful if you’re interested in a specific industry or geographic location.
Many brokers are deeply embedded in their community, maintaining a wide network of contacts, and often have exclusive access to businesses before they hit the general market.
The secret is to build relationships with them.
Twitter has actually proven itself as a reliable networking tool, and believe it or not, you can find several reputable business brokers actively engaging on this platform.
Here are a few Twitter handles of prominent business brokers to get you started:
1. @ClintFiore: Founder of Bison Business (a sell-side brokerage previously named Texas Business Buyers), Clint Fiore has been a leading figure in the broker industry for several years.
2. @EdMyso: Managing Partner at Indiana Business Advisors, Ed brings a wealth of experience and a comprehensive understanding of various business markets.
Remember, when dealing with brokers, be friendly, respectful, and professional in all your interactions.
Even when you disagree with a broker, it is crucial to be diplomatic.
These relationships can be the key to finding your perfect business opportunity.
With brokers, it's all about building a rapport and establishing trust. The stronger your relationship with them, the more likely they are to think of you when an opportunity that suits your interests arises.
They may even provide you with valuable insights to help ensure the success of your business acquisition.
Part Five - Source Off-Market Deals
When you're on the hunt for businesses for sale, don't just restrict yourself to traditional methods.
While online platforms and business brokers provide great options, they do not necessarily cover the entire marketplace.
Some of the best deals are those that never even hit the market - the elusive 'off-market' opportunities.
Pro Tip: We will dive deeper into this topic as we progress through the course, but it's worth noting now that off-market deals pose greater challenges compared to listed opportunities. This is largely due to the absence of a broker who can assist in navigating complex issues that may arise during the process. However, the silver lining here is that off-market deals often present the opportunity to secure a better bargain, making the added effort worthwhile.
Off-market deals, as the name suggests, refer to businesses for sale that are not publicly advertised.
Sourcing these opportunities requires a bit of creativity, but the rewards can be significantly higher.
Let's explore some popular methods to uncover these hidden gems:
Proprietary Search
One effective strategy to find off-market businesses is by conducting a proprietary search.
This method involves picking a target industry that aligns with your skills or interests and thoroughly researching it.
Gather data on target businesses within the relevant geographic location and size, understand the industry landscape, and identify potential business owners who might be ready to sell.
Develop a guerrilla strategy that can involve cold calls, emails, or even face-to-face meetings.
The goal is to uncover opportunities that are not on anyone else’s radar...maybe even the seller’s!
Networking
Never underestimate the power of networking in discovering off-market opportunities.
Platforms like Twitter, LinkedIn and Facebook, professional groups, golf clubs, and even informal gatherings can be potential gold mines.
Start by connecting with business owners, advisors, or anyone who might have an insider’s perspective on businesses looking to sell.
Communicate your intent and the type of business you're interested in to everyone you meet.
The more people are aware of what you’re doing, the more leads you'll likely receive.
Attend Events
Industry-specific events, such as business expos and networking events, can provide an excellent opportunity to meet potential sellers before they list their businesses for sale.
These venues also offer a great way to expand your professional network and increase your industry knowledge.
One such event is SMBash (https://smbash.com/), which is dedicated to small- and medium-sized business buyers and operators.
This can be a fantastic place to start your off-market search, meet potential sellers, and gain valuable insights from experienced business owners.
By exploring off-market opportunities, you step outside the competitive bidding environment, which often results in better deal terms. But remember, off-market doesn’t necessarily mean easy.
These methods require proactive outreach, patience, and persistence.
However, the reward could be a unique business that perfectly suits your entrepreneurial aspirations and offers considerable potential for success.
Disclaimers
Now for a few required disclaimers. Sorry in advance!
This course is being presented strictly for educational and informational purposes, and not for the purpose of marketing any legal services or seeking legal employment and is not motivated by pecuniary gain.
The opinions stated in this course from the authors represent the opinions of such individual author and not the opinions of any other person or organization.
Nothing contained in this course or otherwise from the authors hereof is to be interpreted as legal, financial, tax, investment and/or any other form of advice. Please consult your own legal, financial, tax, investment and/or other advisors.
The authors are not your lawyer, and no information provided in the course of this class or otherwise has the affect of forming an attorney-client relationship between you and the authors. In short, get your own lawyer!
This course is being presented by The SMB Center LLC and has no affiliation or relationship SMB Law Group LLP.
About the Authors
The authors have worked for some of the most elite law firms in the world.
During their time in BigLaw, they regularly worked on transactions in the hundreds of millions to billion dollar plus range for some of the most recognizable companies in the world and have extensive experience with M&A.
The authors have since begun investing in select SMB acquisitions and have co-founded an SMB-focused law firm where they’ve collectively worked on hundreds of millions of dollars in SMB-focused M&A.