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Buying an Existing Business

WELCOME

Buying an existing business is a big move, and a smart one when done right—it can save you from the risk and time involved in starting from scratch.

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. Define What You’re Looking For

  • Industry: What kind of business are you interested in?

  • Size: Revenue, number of employees, location, etc.

  • Location: Are you open to relocating or want something local?

  • Budget: How much are you able/willing to invest?
     

Search for Businesses

You can find businesses for sale through:

  • Online marketplaces: BizBuySell, BizQuest, Flippa (for online businesses), LoopNet (for commercial real estate), etc.

  • Business brokers: Like real estate agents for businesses.

  • Networking: Ask around in your industry, attend meetups, or talk to local business owners.

  • Direct outreach: Reach out to businesses you're interested in (even if they're not actively for sale).
     

Do Preliminary Evaluation

When you find a potential deal, look at:

  • Financials: Revenue, profit, margins, and trends over the last 3–5 years.

  • Reason for selling: Retirement, burnout, market issues?

  • Assets included: Inventory, equipment, real estate, IP, customer lists.

  • Business model & customer base: Is it reliant on one client? Is it seasonal?
     

Sign an NDA & Request Financials

Before digging deeper, the seller may ask you to sign a non-disclosure agreement (NDA). Then, review:

  • Income statements

  • Balance sheets

  • Tax returns

  • Lease agreements

  • Employee and supplier contracts
     

Valuation & Offer

  • Work with a CPA or valuation expert to assess fair market value.

  • Valuation methods include:

    • Earnings Multiple (e.g., 2–3x EBITDA)

    • Asset-based valuation

    • Comparable sales

  • Then make a Letter of Intent (LOI)—a non-binding offer outlining your terms.
     

Due Diligence

Once the LOI is accepted:

  • Dive deep into financials, legal liabilities, customer data, HR, technology, etc.

  • Look for any red flags.

  • Engage a lawyer and accountant to help.
     

Secure Financing (if needed)

You can fund the purchase through:

  • Personal savings

  • SBA loans (in the U.S.)

  • Seller financing (where the seller acts as a lender)

  • Bank loans

  • Investor capital
     

Finalize the Purchase Agreement

Work with a business attorney to:

  • Negotiate terms

  • Structure the deal (asset purchase vs. stock purchase)

  • Finalize the purchase agreement
     

Transition Plan

Plan how the business will change hands:

  • Will the seller stay on temporarily to train you?

  • Will you keep existing staff?

  • Communicate clearly with customers and employees
     

Close the Deal

Once all terms are agreed upon and financing is secured, sign the paperwork and transfer funds. You’re now the new owner!

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