Buying an existing business from an owner looking to retire or otherwise cash out is an attractive way to become an entrepreneur. But finding owners who are looking to sell may not be easy.
Many business-acquisition opportunities aren’t always widely known, even by the investment bankers who facilitate such deals, because sellers fear roiling employees and customers by taping a for-sale sign in the window. Instead, they wait patiently for the right buyer to knock.
Accountants or lawyers who work with small-business owners might know of a client’s desire to sell, but often it pays to focus on one particular industry and contact owners directly.
Try the strategy that one entrepreneur calls “call-mail-call.” Start by calling a few business owners in the industry and ask if they know someone who may be interested in selling. Don’t request an immediate answer, but say you’ll follow up. Two weeks later, send a letter with your business card reminding them about your desire to find prospective sellers and say that you’ll call again soon. Finally, call back to inquire if they’ve come up with any ideas.
This strategy shows that you’re a serious buyer. And even if the owners you contact aren’t looking to sell, they might know another who is.
Other resources are trade-group newsletters with classified ads. You can also read local business publications. As you do, look for business owners who seem old enough to be ready to retire. It’s possible that they want to but don’t know what they’re going to do with their business.
It can’t hurt to build a network of investment bankers, primary lending institutions, mezzanine lenders, brokers and venture capitalists. (Professional investors may be looking to divest businesses from their portfolios.) But in the end, directly networking with actual business owners might be more effective and efficient than relying on middlemen who ought to be in the know but often aren’t.
Posted in: Buying & Selling A Business