A comprehensive guide to finding businesses for sale beyond traditional business brokers
When looking for businesses for sale, it's worth remembering that only one in five is ever advertised. For that reason, you should take the initiative and seek out prospective sellers rather than relying on finding them through adverts.
You have more resources at your disposal than you perhaps realise. The Internet is a powerful way of reaching out to people as well as conducting research, and your existing physical and online networks of contacts give you much wider reach than you could achieve on your own.
That has the potential to allow you to find those hidden opportunities that aren't ever advertised. More opportunities give you more choice when it comes to buying your own business. If you have more choices on your shortlist, you have a better chance of finding great deals and hitting your business plan and life goals faster.
"What you should aim for is good deal flow. As Jonathan says, the most successful dealmakers have a constant flow of potential deals."
In this guide to finding businesses for sale we will show you where to look to find your next business, beyond the typical approach of using a business broker. Whether you want to learn more about using a business broker or know how to buy a business without one, this guide is perfect for you.
With business brokers, there are three levels: business transfer agents, business brokers, and corporate finance.
Tip: To check how good a broker is likely to be, check their website for awards and testimonials, and google them to see what people are saying online.
If using a broker does not feel like the right approach, don't panic; there are other worthwhile options to explore. There are many other ways to find businesses for sale, from ecommerce to a day nursery, start-ups to SaaS, without resorting to brokers or looking at adverts.
Talk to your personal and professional network. That can include friends and family, your accountant and solicitor, a finance broker, work colleagues or any other contacts.
To expand your network, look for relevant gatherings – for example, join your local Chamber of Commerce and look for business networking events. The more people know you are looking to buy a new business, the better the chance someone will contact you about one that is for sale.
Your clients or suppliers may know people who could be persuaded to sell their business to you. Let them know the kind of business you're interested in, and in which sector.
A new client might have come to you because the company they were using is going downhill. That could be worthwhile information and a tip that a business is – or soon will be – for sale.
Suppliers can be especially useful as there's every chance they also supply your competitors – and if one is looking to sell, you can both gain a business and reduce the competition.
Arrange meetings with competitors and suggest that your two companies merge. Do you have a competitor that it would make sense to merge with? Or perhaps they might be looking to sell, meaning you can acquire their business outright and become the new owner?
This is something that must be approached with care. Competitors will no doubt be cagey about sharing things like financials with you, as you would be with them. However, if you can make a business case for a beneficial merger or acquisition, reach out and see how they respond.
There are online directories that list businesses for sale. Find one that specialises in your chosen sector and get into the habit of scanning those sites regularly.
Popular business listing sites:
An estimated 90% of ads on business sales websites are placed by brokers but there can be some nuggets in there worth pursuing. You can set up alerts on Deal Opportunities so you know if anything comes up that includes your keywords or is within your parameters.
Buy or build a database that has the names and physical addresses of business owners in the specific sector you're targeting. Write a personal letter. Explain that you're a private investor and share your motive for wanting to buy businesses in their sector.
Whatever type of business you are looking for, writing letters to business owners is the number one method of getting enquiries from people who want to sell their business.
Be organised about this:
This can function as the only activity you need to do to establish and maintain good deal flow, and good deal flow is the key to getting a good deal when buying a business.
Place adverts in publications that serve your sector. Your advert can say something like, "Private investor seeking new business opportunity. Contact [your email] for more information."
To get the most from this, spend some time looking at the kind of ads other people put in those publications and consider which ones catch your eye the most. Remember that to get a response, an ad generally has to be seen more than once, so go for a series rather than a one-off.
Advertise on the major search engines like Google or Bing to attract willing sellers. You'll need to invest in PPC advertising and have a landing page where sellers can enter their contact details.
PPC is pay-per-click – you pay every time someone clicks on your advert. The landing page is the place the click takes them to. To get the best out of any advertising campaign, you'll need to either put the time in to learn how this works or hire someone to handle it for you.
You can attract the interest of willing sellers by using display ads on platforms such as LinkedIn, Google and Facebook. Digital display ads are usually interactive and can take people to your landing page where the information can help ensure only sellers with the right business type come to you.
Write brief posts on social media platforms such as LinkedIn, Facebook and Twitter to let your followers, fans and friends know that you are actively looking for businesses to buy.
"I put one post on LinkedIn and received 17 responses."
If you post in sector-specific or otherwise relevant groups, make sure you follow the rules. Some allow ads one day a week, for example. That day can also be a good day for seeing posts from people seeking business buyers, so read as well as post for best results.
Visit trade shows that cater to your target sector. Use it as an opportunity to contact business owners. Let them know you're interested in buying profitable or distressed companies.
At these types of events it's useful not just to give out business cards, but to collect them as well. Put those contact details into an Excel spreadsheet, and send people a regular email. The network you build will become invaluable.
Get to know other dealmakers and let them know the sector you're looking at, and what kind of businesses you're interested in buying.
Mastermind groups, such as the Dealmakers ones, can be useful ways to meet other people in the same position as you. As well as sharing experiences, you might be able to benefit from each other's networks, and possibly businesses.
As well as staying alert to business-buying opportunities, keep an eye out for cross-promotional opportunities. If you make printers and another dealmaker makes paper, your products are complementary – both sets of customers could be interested in both products.
Form a partnership with another dealmaker. Rather than going it alone, leverage the power of joining with one or more others who share your goals and ambitions. Just make sure you draw up a partnership agreement before you get into any deals.
Another benefit of being in touch with other entrepreneurs is that you can swap deals with other dealmakers. A business you don't want might just be someone else's 'dream deal'. A deal-swapping network might be formal or informal, but it makes sense to tip each other off about opportunities that aren't right for you but are potentially good for another dealmaker.
You might buy a distressed UK business from the insolvency practitioners via a pre-pack administration deal. This is where you buy the assets and leave the liabilities behind, meaning you get a clean business. It's a legal process that allows the rescue of a business, and effectively gives it a second chance.
Drawbacks: You won't be able to carry out much due diligence. You will be buying the assets 'sight unseen' and will probably have to make a blind bid.
Benefits: Administrators might agree to staged payments. The business might be essentially sound and have a good track record and a valuable customer base, but have been pushed into liquidation through poor cash flow.
Important: You need a good insolvency lawyer on your side to take you through the process. Remember that as well as covering purchase price and fees, you will likely also need to put in some working capital upfront.
Another way to purchase a business is to buy a franchise. A franchise gives you the right to sell particular goods/services in a specific territory. Sites like Franchise Direct can be a good starting point.
On the plus side: You get a tried and trusted business model selling under a recognisable name.
The other side of the coin: You can't just do what you want, how you want, and as well as the purchase price you generally have to fork over regular royalty payments in exchange for things like training and marketing support.
One of the more unusual ways of buying a small business is via an auction house. You can potentially get a good deal as businesses are priced 'realistically'. The current owner can put a reserve on the lot, but there is no scope for price negotiation on their part.
Tips: Do your research and as much of the due diligence process as possible. Set a clear budget in advance as if there is stiff competition the price can be driven up. Know when to back off. Auction houses tend to be local, so check out what is available in your area.
I want to give you access to my complete Business Buying Toolkit so you can discover how to buy your first business, how to source and finance deals, and how to find businesses that aren't listed.
Download Your FREE ToolkitAcquiring a small business might be one of the best investments you ever make. If you know the signs of a profitable business you could quickly reap a return on your purchase. But first, you need to find a business to buy.
Using this guide should make that process significantly easier. Once you find a business, be sure to read some of our other guides to learn more about due diligence and other vital steps in a business acquisition.