How to Find Businesses for Sale

Buying an existing business has significant advantages over starting a business from scratch, but finding businesses for sale takes some effort. You’ll need to do your homework to identify businesses that meet your needs and conduct careful research to be sure that the business you select is positioned for success.

Why Buy an Established Business?

Buying an existing business eliminates some of the risks of starting a small business. You’ll get systems, procedures, and employees, so you can hit the ground running. You’ll have a revenue stream and cash flow from day one. And you can avoid many of the mistakes entrepreneurs may make when starting a business from scratch.

Since you won’t have to reinvent the wheel, you can focus your time and efforts on developing ways to increase sales, improve efficiency, and grow and scale your business.

When you buy an established business, you can avoid, or at least minimize, some of the most time-consuming and expensive tasks that come with startups. You’ll get:

• A customer base that you can rely on for cash flow. Your established customer base can also help you identify the most likely audiences for acquiring new customers.
• An established brand recognized in the community you serve with logos and marketing messages already in place.
• Proven processes and operations that will allow you to focus on improvements and upgrades.
• Productive employees who don’t require training and can also inform you of the business’s strengths and areas that might need improvement.
• Records and financial history that allow you to see which areas of the business are working well and where improvements are needed. You’ll also be able to analyze the company’s financials to leverage growth opportunities.

Before You Begin Your Search for Businesses for Sale

Before you search to find businesses for sale, take an inventory of your skills and interests and make a list of the attributes you want in a business. You can then zero in on the types of businesses you should look for and quickly eliminate other businesses that don’t meet your needs.

If you have specific industry expertise, buying a business in that industry will give you a head start. If you’re trying to move out of the industry you’ve been working in, taking stock of your skills can show you how to apply your expertise to a different industry.

Next, decide on the must-haves for your business. For example, if you don’t want to travel, you’ll want to focus on businesses that only operate locally. If marketing isn’t your strong suit, you might want to find a business with a solid marketing plan.

Take a page out of the private equity firm playbook and their approach to finding businesses for sale. Figure out the fundamentals that are most important to you. Do you want a business with strong cash flow or high margins? Do you want to compete on price, or do you want a business with a unique selling proposition? Some of the other questions you might ask to identify the right business for sale are:

• Do you want a business that’s sales driven or one that manufactures a product?
• What geographic market and target audience should your business serve?
• How hands-on do you want to be with the business?
• Are you willing to take on a business that operates seven days a week, or do you want to have weekends off?
• How much are you willing to spend to buy the business?
• Are you interested in buying a franchise that gives you ready-made operating procedures and requirements or do you prefer to do all the decision-making?

The business you choose should align with your skills, interests, needs, and budget.

Conducting a Search to Find Businesses for Sale

As with any endeavor, it’s best to use several tactics to locate business opportunities. Not only will employing different search methods speed up your search for the right business, but it will also help you to uncover what those in the industry refer to as hidden listings—businesses that aren’t actively listed for sale.

Business buyers should explore these avenues to find a business for sale:

• Search online business for sale marketplaces
• Hire a buy-side business broker
• Network with other business owners, professional service providers, friends, and family
• Search classified ads in trade journals, local newspapers, and magazines

Using Online Business for Sale Marketplaces

Online business listing services are among the most popular ways to find businesses for sale. As you weigh your options and decide on the best business to buy, these services can assist you in narrowing down the field.

The largest online listing services, such as BizBuySell and BizQuest, feature businesses from all industries. They allow you to target your search, find business brokers, and get email alerts when new businesses in your industry are listed. (We are admittedly biased, but our online marketplaces are leaders in the field.)

BizBuySell is the largest and most active online business listing site, with 65,000 businesses listed annually and more than 3.5 million monthly visits. You’ll find business opportunities ranging from automotive shops to convenience stores, gas stations, and coffee shops, as well as specialized business categories such as delivery routes, distributorships, absentee-run businesses, home-based businesses, and businesses with real estate.

Business buyers can search listings by industry, geography, price range, revenues, and cash flow, as well as keywords. For a monthly membership fee, buyers also get access to valuations for companies in their target industry and data on real estate and local demographics.

You can also create a BizBuySell account to access information and tools to help navigate the buying process.

BizQuest, a sister company of BizBuySell, also provides free searches for buyers and a robust directory of business brokers. You can narrow your search by features such as seller-financed or home-based businesses. You can search for business brokers and get information on their experience and the listings they represent.

If you want to find a specific type of business, use online business-for-sale listing services that specialize in particular businesses, such as car washes, e-commerce businesses, dental practices, and accounting services.

Using a Business Broker or M&A Advisor to Find Businesses for Sale

Business brokers and M&A Advisors specialize in representing buyers and sellers in business acquisitions. Most business brokers represent sellers, but some have experience representing the buy-side of a deal.

When deciding between an M&A advisor or business broker for your transaction, consider the business’ revenue circumstances. For businesses with less than $10 million, business brokers are the preferred option, while M&A advisors are more suited for larger companies.

Business brokers charge a commission for services—usually 5% to 10% of the sale price of the business—but they also help to ensure a successful sale. You’ll want to choose a business broker with knowledge and experience in your industry and the local market.

A good business broker can help you:

• Target your search and screen out businesses that won’t be a good fit
• Widen your search using their own databases of businesses for sale and their contacts
• Evaluate businesses you are interested in and screen out failing problematic businesses
• Negotiate the deal
• Manage the paperwork involved in closing a deal

To get the most value, find a broker or M&A advisor with a solid track record and familiarity with your industry and deal size. Conduct due diligence on the brokerage firms you are considering, and check references.

Depending on your needs, you should hire a business broker to assist with some, but not all, of the buying process. For example, you might search for businesses for sale on your own and hire a business broker to assist with closing the deal once you’ve found the right business.

Business brokerages also post the listings they represent on their websites. You can use these websites to find businesses for sale and sign up to receive alerts when new listings come on the market.

Network with Business Owners, Suppliers, Professional Service Providers, and Others

Other local business owners and professional service providers, such as attorneys and CPAs, can be great resources for learning about businesses that are not yet actively listed.

Many business owners don’t want their customers or employees to know they’re interested in selling and discretely put out feelers through their networks. The owners of Main Street businesses, especially, are often plugged into the local area, and your suppliers are well-connected to other businesses in the industry. They might be aware of an owner’s plans to retire soon or those who are willing to entertain a sale.

Cold calling other business owners and letting them know of your interest in buying a business can often lead to helpful discussions about running a business, tips on avoiding problems, and leads on businesses for sale. Your network of suppliers and vendors can also be a resource for finding businesses for sale.

Likewise, lawyers and accountants might have inside information on businesses that are about to be listed or small business owners planning to retire or dealing with issues such as divorce or illness that could lead to a business opportunity for you.

When you attend trade conferences and local networking events, make your interests known to the business owners you meet. You might come upon a business owner interested in selling, or you could learn about other opportunities.

Remember that one phone call or meeting won’t keep you top of mind. Keep in touch periodically with your network so you can take advantage of opportunities as they arise.

Check Business for Sale Ads

Most trade journals and business publications feature a classified section with businesses for sale. These publications might be less helpful when looking for businesses for sale in a specific geographic territory. Still, the ads will give you some insight into regional differences, and you might find a relocatable business that meets your criteria.

Conducting the Sale

Once you’ve found a business that meets your needs, you’ll have to evaluate the asking price and ensure the business is as the seller claims.

Assemble a team that includes an attorney, a CPA, and a business broker to assist with evaluating the business and gathering the documentation you need to close the deal.

Before you sign on the dotted line, conduct your analysis of the business:

• Compare the business valuation to similar companies in the industry
• Find out why the seller is selling
• Consult with the business’s customers, competitors, and employees
• Conduct due diligence, including a review of financial statements, tax returns, licenses and permits, contracts, and leases
• Arrange for a training period that meets your needs
• Negotiate the asking price
• Negotiate and sign a purchase and sale agreement

Keep your evaluation objective and take your time. The more you know about the business before you buy it, the better equipped you’ll be to manage it once the sale closes.

To understand more about how to buy a business, please visit our library of articles on How to Buy a Business For Sale.

If you're looking to buy an established business, sign up for a free BizQuest account and create custom searches to compare businesses in your industry of interest and your local area.