How To Find Businesses For Sale

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. With that said, using a business broker is a very real and practical solution, and they have comprehensive business listings for you to browse, so we will address that avenue too.

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.

Approach Business Brokers

With business brokers, there are three levels: business transfer agents, business brokers, and corporate finance.

Business transfer agents operate at the lower end of the market, doing small deals – cafes, hairdressers, etc. – typically under £100,000.

‘Business broker’ is generally used as a generic term for anyone who acts for the seller of a business up to the £5 million mark.

Corporate finance is the top end of the market, and corporate finance firms are often a division of an accountancy firm.

We’re focusing here on the mid-range broker, and there are advantages and disadvantages of using one to source businesses for sale.

On the plus side, business brokers are already working with willing sellers. They’re also likely to have comprehensive details about any business that’s up for sale. This will speed up the buying process because you won’t have to wait while the seller compiles the information you need.

Some brokers specialise in selling businesses in a specific sector, or of a particular size, or in a certain geographical area, and this can be a benefit.

However, the business model involves giving the seller a high valuation to secure a listing so there’s a risk the broker will have inflated the seller’s expectations in the same way that estate agents tend to do with property owners. There is also a strong possibility that to get the best price for their client (the seller), they will encourage you to get into a bidding war.

When it comes to finance, a broker is likely to want you to have 100% of the purchase price in cash at the point of sale – often because they know that the asking price does not stack up for a lender.

If you want to know 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.

Sourcing & How To Find A Business To Buy

If using a broker does not feel like the right approach, don’t panic; there are other worthwhile options to explore to allow you to find the best business for you. 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. They include:

Word of mouth

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.

Clients

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.

Pitching To Competitors

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.

Web Listings

There are online directories that list businesses for sale, like www.rightbiz.co.uk, uk.businessesforsale.com, https://www.bizbuysell.com/, and more. Find one that specialises in your chosen sector. Get into the habit of scanning those sites regularly.

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.

Direct Marketing

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: buy a targeted list from a list broker; use a mailing house to send out your letters – and aim to send hundreds, not tens; set up a phone number using (for example) Circle Loop and download the app so you know when someone is contacting you about selling their business; have a dedicated email address. If someone emails, aim to get them on a phone call as quickly as possible – email may be convenient but it’s not as effective, and it doesn’t work for building rapport and/or negotiation. Send new mailings, and follow-up letters to non-respondents, regularly – monthly can work well.

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.

Advertising

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. That can help you decide the kind of ad you want to place. Ultimately, you can’t know how effective those ads are, but you can emulate the ones you like in the expectation other people will also like them.

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 to give yourself a better chance of success.

Search Engine Ads

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 run, you’ll need to either put the time in to learn how this works so you can do it yourself or else hire someone to handle it for you.

Display Ads

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 they might use a combination of banners, text, images, audio and video. Ultimately, they can take people to your landing page, and the information there can help ensure only sellers with the right business type come to you.

Organic Social Media

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.

Trade Shows

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.

Other Dealmakers

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. (In simple terms, if you make printers and another dealmaker makes paper, your products are complementary – both sets of customers could be interested in both products.)

Partnering

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.

Deal Swapping

Another benefit of being in touch with other entrepreneurs is that you can swap deals with other dealmakers. After all, 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.

Administrators

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.

There are a few drawbacks to going through administrators. You won’t be able to carry out much due diligence on the purchase. You will be buying the assets ‘sight unseen’ and will probably have to make a blind bid. On the plus side, administrators might agree to staged payments.

These sorts of deals and the subsequent business transfer are done very quickly because the longer a distressed business is distressed, the less likely it is you will be able to rescue it. 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, for example, and the longer that goes on, the worse things get. Understanding where the previous owner went wrong can be useful. You need a good insolvency lawyer on your side to take you through the process.

When you cost out a venture like this, remember that as well as covering purchase price and fees, you will likely also need to put in some working capital upfront. If it’s an online business it might have few tangible assets, but if there is property attached to the business, whether freehold or leasehold, that can help with financing.

Franchise Opportunities

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. If you are interested, sites like Franchise Direct https://www.franchisedirect.co.uk/ 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 is that 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.

Business Auction Sites

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.

You need to do some research and as much of the due diligence process as is possible to understand what the business is worth to you. Make sure you set a clear budget in advance as if there is stiff competition the price can be driven up and the temptation is to become determined to win at all costs. Know when to back off.

Auction houses tend to be local, so check out what is available in your area, or in the area where you want to make your business purchase, if that is different.

Take action now

Acquiring 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.

If you would like additional help, download your FREE Business Buying Toolkit.

Having someone with years of experience in business mergers and acquisitions on your side can be a huge advantage. Jonathan Jay has helped more than 3,000 people buy successful existing businesses and become acquisition entrepreneurs, and he has put together the most comprehensive FREE package of business buying resources available today. To get started on your acquisitions journey, download your FREE Business Buying Toolkit now.