Getting Started as a Buyer
Buying a business is a life-changing decision. Whether you're looking for an owner-operator role or a strategic acquisition, understanding the process is key to success.
1. Define Your Criteria
Before you start searching, define what you're looking for:
- Industry: Which sectors do you understand or have interest in?
- Location: Do you want a local business or one that can be managed remotely?
- Size: What are your target revenue and EBITDA ranges?
- Budget: How much capital do you have for a down payment?
2. Start Your Search
Browse platforms like Clover Deals to find verified listings. Look for businesses that match your criteria and have clean financials.
3. Preliminary Inquiry
Once you find a business, reach out to the seller or broker. You'll usually need to sign an NDA (Non-Disclosure Agreement) before receiving detailed information, such as the CIM (Confidential Information Memorandum).
4. Evaluation and Valuation
Analyze the financials (tax returns, P&L statements) and operations. Determine if the asking price is fair based on industry multiples and future growth potential.
5. Letter of Intent (LOI)
If you're satisfied with your initial review, submit an LOI. This is a non-binding proposal that outlines the terms of the deal, including price and the exclusivity period for due diligence.
6. Due Diligence
This is the most critical phase. You and your advisors (accountants, lawyers) will deep-dive into the business to verify every claim made by the seller.
7. Closing the Deal
Once due diligence is complete and financing is secured, legal documents are finalized, and the deal is closed. Congratulations, you're now a business owner!