Buyer Frequently Asked Questions

Where do I find businesses for sale?

There are many places to look for a business. An intermediary like NorthCoast Partners or business brokers is one place to look. In most cases you can visit websites to see a brokers listings. A phone call is helpful so these professionals know what you are looking for. Also there are listings that are not always public.

There are a plethora of business listing websites you can search for businesses that meet your needs. It is like the multiple listing sites used by realtors, only there isn’t one definitive source, instead you will need to navigate a number of sites.

You will also want to contact professionals like lawyers and accountants. They often have insight into businesses that might be coming available.

Lastly you might want to network with other business owners. They can be an invaluable source of information on what is available.

These are just a few suggestions. Get creative here; you are probably looking for that diamond in the rough that meets your needs.

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How much money do I need to buy a business?

Unfortunately there is no simple answer to this. We would suggest you start with looking and what capital you have to invest in a business. This could include both cash and non cash (i.e. property) assets that can be used for a down payment.

Then look at your overall net worth. This includes assets that might not be used for investment but serve as collateral for any loans. For example retirement funds, equity in property etc.

Be clear about how much you are willing to invest so that a seller and/or broker understands your capacity for investment and collateral.

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How much does a business cost?

When a business is listed, often times a formal valuation is performed to determine the value and what it should cost. If the business is not formally valued, there could be an opinion of value from a professional like an accountant, valuator, appraiser, or intermediary. And yes, there are situations where the value of the business is strictly based on what the seller wants to get for the business. What ever the approach, you will want to have someone look at the business with you to make sure the price of the business makes sense given all the factors (i.e. earnings, competitive environment, growth, goodwill).

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What do I need to do to prepare to buy a business?

The first step is the financial assessment referred to above. Knowing your financial picture is very important. At this time, it is important to get a clear sense of your risk tolerance; owning a business is not for the faint of heart. In addition, you should do an assessment of your skills. For example what unique skills to you have to offer? When you find a business that will benefit from your skills, you have an excellent opportunity. For example, lets say you are a great sales person and the business has great product but has lagged in sales, think of the potential this scenario would create. On the other hand, if you are a great sales person and the business needs better financial controls, this might not be a great fit.

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How can an Intermediary help me?

An intermediary works for and is paid by the seller. However, a good intermediary understands the role of helping buyers. It doesn’t do anyone service if someone buys a business that is not a good fit or a good value. Therefore an intermediary will guide you through the process starting with evaluating the business you are considering, preparing an offer, how to handle the due diligence process and closing the business. An intermediary can direct you to resources you will need in the process like an experienced attorney or accountant that will serve as your advisors.

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