READY TO BUY A BUSINESS?

Buying an existing business is a huge business decision. Whether you are buying your first business, relocating, or just looking for an add-on to grow your existing business, the process can be very demanding. Finding the right business requires time, knowledge and often this means enlisting the assistance of a professional business broker.

Benefits of Buying an Existing Business

Many people think that buying an existing business means you are buying something broken, going under, or not profitable. If the owner doesn't want it anymore it must have a declining profit margin or is on the verge of losing its largest clients... right? Something must be wrong. The truth is buying an existing business can be much less risky than starting a new one as long as the buyer is well prepared, educated, and performs their due diligence.

Buying an existing business has many benefits. 

• It  can provide you with immediate income and remove many of the barriers to  entry that seem daunting. 
• Many have long-time customers or accounts that can easily be retained if you  service them "exactly" as the previous owner or better. 
• The business process has been established and the business has a proven track  record.
• Well trained, efficient employees and management are in place

Business owners have many reasons for selling successful businesses. As a buyer, you need to know the reason an owner is selling. Here in Florida, the most common reasons for selling a business are retirement, stepping down due to health reasons, or just tired of running the day-to-day operations year after year and ready for a new adventure. 

Of course, there will be some businesses on the market that are not good deals. Especially in today's market where many businesses were affected by Covid-19 to some degree. To sell a business the owner must have the company's financial records in order to show at least 3-5 years of revenue and profit trends to a potential buyer. An experienced business broker can help you weed through and locate successful business opportunities with increasing profit trends. As a preliminary screening step, a buyer should exam financial trends to determine if a business is worth taking a closer look at. 

Determine What You Can Afford

The first step before you begin looking at businesses is to have your financials in order. Ask yourself these questions: How much down payment do I have? How will I finance the opportunity? SBA, Business Loans, Will I need seller financing? Knowing how much you can afford will help determine the size of the business you are looking for. Most seller's brokers will require you to submit a short Financial Statement before any detailed information can be released about the opportunity. You will also have to sign a Non-disclosure agreement for each opportunity agreeing to not release confidential information about the business for sale.

Know What You Want

• Location - You will need to know where you want to run your new business from unless it's a relocatable business or online like an eCommerce business. Determine what state and counties are suitable. Be sure to research local taxes and labor costs if you are locating in an area you are not familiar with.
• Industry - Are you already licensed for a particular industry?  What experience do you have? If changing industries, you will need to research what licenses or requirements are needed to run a business. Many sellers will require you to have some type of experience related to their business. They want to know their employees will be taken care of and that your vision is similar to theirs for the company's future.

Buy-Side Representation

To some degree, all prospective buyers need assistance in locating businesses and companies for sale. You may need assistance in gathering and evaluating the information on these opportunities, structuring an attractive purchase offer, and obtaining the financing necessary to buy the business. Our clients benefit from all the expertise and related experience an intermediary affords them from the initial investigation until the time of closing. Regardless of an individual’s background, a buyer should always enter the process as well prepared and educated as possible.

Searching for the perfect acquisition opportunity can prove to be frustrating even for the most experienced buyer. Oftentimes they only have access to a small number of businesses listed for sale. Most profitable successful businesses with growth potential remain listed in the “Hidden Market.” What this means to a buyer is that these hidden gems, that they would love to get their hands on, aren’t being advertised.

In the M&A world confidentiality is king. The goal in selling a business successfully is for no one to know it is happening, especially employees, customers, and competitors. This is the reason, so few profitable businesses are advertised on public websites.

If you are considering purchasing a business, speak with one of our Capstone Business Brokers advisors today. They can assist you in finding the right business for you.