If you’re already running your own business successfully, buying someone else’s can wield many benefits.
A new acquisition can increase your asset portfolio. What’s more, if you buy well, most of the groundwork of a new business should have been done and any teething issues ironed out in the early years.
If you buy strategically, you can merge and grow – you could take on an established customer base, a great reputation and a solid brand.
Buying businesses can make you money.
Hunting down the right businesses, however, can feel pretty overwhelming. Don’t panic – you’re not alone. Business owners acquiring a company often feel confused and frustrated, and knowing where to start looking is the first hurdle.
Let’s take a closer look at the most common methods.
Going It Alone
Seeking out suitable businesses with no outside guidance or input is the approach most people try first. It can be relatively time-consuming.
Consulting a data house, sometimes referred to as a data warehouse, is a smart first step. Data houses are huge databases that stock the details of compliant businesses, searchable by criteria including industry, turnover, size and location.
Though searches can be tweaked, this is somewhat of a scattergun approach. Data houses don’t spell out the inner workings of the operation. How is the business doing? How has it been run up until now? Trying to pin down the ins and outs can be hard work.
Once you’ve got your exported list of possible suitors, it’s time for direct action – getting in touch. Most often this comes down to simple snail mail. Either you send the letter yourself, or get a mailhouse to handle it.
And then it’s a waiting game.
Self-search is not the most targeted approach to finding the right business to buy, and it can eat up a fair bit of your time and effort, but it might be worth a shot.
Business brokers sell businesses for Business Owners.
Some keep a portfolio of businesses currently on the market, and others take more of a US realtor approach and hunt down appropriate businesses for you once you’ve disclosed your deepest desires.
On the face of it, the biggest upside of using a broker is that they’ve done a chunk of the work. Someone else has spent time and money gathering background information, including financials, so you don’t have to.
Unfortunately, they’ll only skim the surface. You’ll likely want to do due diligence and dig a whole lot deeper before you can make any sort of decision.
There are also two further, pretty hefty downsides that you need to be aware of, if leaning towards using a broker:
– Inflated prices. Most Brokers are paid a commission. The more they sell a business for, the greater the reward they see.
– Awkward gatekeeping. Some brokers demand long winded admin and form-filling before they’ll even speak to you. This can be tremendously frustrating when you’re on a fact finding mission, working out if you’re even interested, let alone after a quick and easy sale.
Plenty of multi-listing sites exist dedicated to featuring ads of companies for sale.
Sellers pay to list their business, posting appropriate photos and an in-depth description. Think Rightmove for business.
They often also feature a small section of business transfer hosts and brokers, if that’s the way you want to go. Search functions and filters give you control over the results you get and enquiries are made through the site itself.
The top 3 virtual venues for browsing what’s on offer are:
- Daltons. The most established directory of businesses for sale.
- RightBiz. The seller fees here are lower than Daltons.
- BusinessesForSale. Reportedly ‘The world’s largest marketplace’ of businesses for sale.
The information provided on these sites is generally pretty basic – and remember, no one’s going to disclose rising damp on a Rightmove listing – but the potential to wheedle out a list of suitable companies is high and it’s free to use.
LinkedIn is the favourite approach of mine by a mile. At the time of posting, we’re currently in discussion with 14 separate companies that have been approached through LinkedIn – and are interested in selling to us.
Primarily used for professional networking, the online platform is extremely easy to navigate. Similarly to multi-listing sites, LinkedIn offers plenty of search filters to aid in narrowing down your results.
Once you’ve got your list, you can visit a company’s page, pinpoint people in the right positions and reach out personally by requesting to connect or sending an InMail, depending on your connection level.
It’s very, very simple, and extremely effective.
The best part is, you don’t need to upgrade to ‘Premium’ to make use of LinkedIn as a business purchasing tool. Basic is sufficient. Whilst searches and connections are capped, it’s very unlikely you’ll need to surpass 1000 searches or 400 connections to find what you’re looking for.
Buying businesses can grow your existing company and line your pockets, without the strain and stress of the start-up stage.
If time isn’t on your side, you’re doing it alone or you’re not familiar with the process, it can be stressful or seem unachievable.
But it doesn’t need to be. With the right support, it’s far easier. And that’s where the Business Success Consultant comes in.
Clive has done it all, including buying businesses. Firmly in the loop, he can guide you through what might feel like a minefield of company ads, and get you the business that’s right for you.
The Business Success Consultant can help. So what’s stopping you? Book a call with Clive today.