Purchasing new businesses can be a great idea and astep into entrepreneurship, and while there are plenty of options,you’ll also find various scams or low-qualitybusinesses that don’t fit your criteriaaswell. That does make you wonder, how can you find high-qualitytheperfect businessesbusiness toacquire? Here are some of the main things you have tomustconsider!
A good starting point is your own network. Connecting withother business owners and people within your niche could help you identify somegreat businesses that are for sale. That’s a great starting point, so it neverhurts to leverage your network as you try to find the best options.
There are a few things to focus on right off the bat, likewhat budget you have, the online image of the company you want to buy, whatcash flow/debt the company has at this timecurrently,and why they the current owners aretrying to sell the company. Obviously, you want to go for a growing, thrivingbusiness and not one that has tons of debt.
One of the mistakes many people make when trying to acquirea new business is they go for any type of business. The best approach is toalways go for something you know very well. If you’re already a part of thatindustry, it will be a major advantage. That knowledge and expertise can helpyou avoid a bad purchase while saving a ton of money in the process as well.
What you want to look for is the overall profitability ofthe business. The yearly statements are a great thing to check out, mainlybecause they offer transparency and a good insight into how the company isdoing. You want to avoid companies that are slowly declining. A high-qualitybusiness will usually be on the rise, and it shows great potential.
A note here is that if you are the perfect buyer,which means you know exactly how to turnaround a business in aniche which is declining, a declining business can be a great value purchase.
Aside from that, it also helps to check what assets willcome with the purchase, if the company is liable for anything, etc. Ideally,you want to reduce any risks and ensure that your purchase will lead toeventual profits. That’s not easy to achieve, but there can be great results ifeverything is managed appropriately.
It’s very important to try and do your research as much aspossible to find great businesses. A lot of the time, it’s possible to findbusinesses for sale in trade publications, or you can check market research firms.There are also public procurement databases where you can see corporate filings,for example.
Networking and industry events can also help you findcompanies for sale. Some companies showcase their interest in selling orfinding investors during these events. That means it’s very much a possibilityto find a company for sale at such events. Plus, you should also consideronline marketplaces and supply chain platforms that could help you check whatother purchasers are buying. It gives insights into the industry trends whileconveying very good results.
Aside from all the aforementioned ideas, there are manyothers to keep in mind, including:
· Working with intermediaries (business brokers,mergers and acquisition advisors, or investment banks) could be anoption since they might already have access to a large network of businessesfor sale. Business brokers, mergers and acquisitionadvisors, or investment banks could help you with this.
· Use online marketplaces like Acquire.com that. Theylist businesses for sale, and you could find some great companies to buy.
· Going to online directories and checkingbusinesses that seem to do well and then sending them a purchase offer can be agood idea.
We recommend studying the market, seeing what companies arefor sale, and narrowing down the best investments. Focus on profitablebusinesses with a growing community topline (revenue) andthat don’t have that much (if any) debt. Doing so will help you find the rightcompanies for purchase, while avoiding any bad investments!
