How to Find a Great Business to Buy

Buying a Business

Following your instinct into the world of being an entrepreneur can be an exciting yet intimidating feeling. There are literally no limits to the possibilities other than those self imposed. Once you have made the decision that owning a business is the direction you want to take, you start the challenging process of buying a business.

The process of buying a business can seem daunting and in many ways it is. ABMI has developed a best-in-class buyer representation program in which a seasoned advisor personally escorts you through the process. A process that we believe will positively impact your life.

First you need to decide what type of business is right for you. There are thousands of different types of businesses from which to choose. Selecting a business that you can be passionate about and will allow you to use your resources and talents effectively is an essential ingredient for long-term success as an entrepreneur.

Personal Resource Assessment
Many people forget to begin with an honest assessment of themselves before beginning the quest toward business ownership. Making the big decision that business ownership is your chosen path is just the start. Understanding yourself is a critical step to finding the right fit. Here is a very quick personal assessment checklist to start thinking about:

Personality Assessment

• What are your schedule expectations? (Retail hours can be different than manufacturing hours)
  
• What are your strengths/weaknesses?
  
• What do you like to do vs. dislike?

There are a number of resources available to help with a personality assessment.

Financial Assessment

• What financial resources do you have? Is this liquid capital?
  
• Are you and your spouse comfortable with taking a second mortgage out on your house if needed?
  
• Have you updated your personal budget?
  
• What are your ongoing financial needs?
  

Family/Friend Support

• How does your spouse feel about this decision?
  
• How does your extended family feel about this decision?
  
• How do your close friends feel about this decision?
  

It may seem irrelevant now, but during the emotional and sometimes uncertain times, the support (or lack thereof) from family and friends can have a big impact on your ability to persevere.

The Premier Buyer Program at ABMI begins with a thorough personal assessment to help you gain more clarity on important factors that can enhance your success. The personal assessment may bring up some issues that cause you to reevaluate the decision to buy a business. We believe that this is an important process and we will consider it an honor to help you firm up your decision even if it does not lead to you buying a business.

In addition to the personal factors of consideration, other factors should be included in your decision. The selection of a business is an evolving process and more of an art than a science. You should begin to look at businesses that make sense as preliminary targets based on the initial assessment. A good place to start is by looking at an industry with which you're both familiar and which you understand. Another point of consideration is the size of business you are looking for, in terms of employees, number of locations and sales. If you do not like to travel than a business that has a local customer base or the ability to handle functions requiring travel through alternative resources should be carefully measured.

Once you have decided on one or two industries to focus on, the size parameters that realistically fit your needs and financial resources, and the geographical preference, specific businesses should be identified.

Industry Analysis
ABMI will research the industry using up-to-date market data looking for trends and developments that could impact businesses in the industry. We will assess recently completed transactions to determine valuation metrics and review potential key success factors useful in assessing opportunities in the selected industry.

Preliminary Search
ABMI has extensive databases that contain information on companies and can be efficiently sorted by industry, size, etc. An initial search will be conducted to identify a group of businesses that meet the general criteria. The results of this search will be reviewed with you to discuss specific opportunities that should be considered or ignored.

Prescreen Businesses
Next we will prescreen the company to confirm that the information available supports the assumption that it is a fit. We will research recent activity on the business and confirm that the preliminary assessment is consistent with information available.

Create a Confidential Buyer Profile
Prior to approaching businesses owners, it is important for us to develop a Confidential Buyer Profile highlighting your qualifications, background, and resources. This will add credibility to our conversations with business owners and reduce unproductive communication to validate the legitimacy of our intentions.

Contact Business Owners
We personally contact the owners of the businesses identified in our preliminary search. Our communication style is very professional and succinct. This is not presented as a sales call. It is a serious inquiry from a qualified individual about buying their business, and we handle the conversation honorably. Some businesses owners are not interested in pursuing future conversations…and some are. We will provide the business owner with a Confidential Buyer Profile on you.

Confidentiality
Most business owners are very sensitive about confidentiality, and rightfully so. Once a business owner expresses an initial interest in talking to you about a possible sale, we always begin the second stage conversations with a signed confidentiality agreement to provide a comfortable foundation to begin exchanging potentially sensitive…and very important information.

Information Exchange
Each business owner has a slightly different preference in terms of providing detailed information on their business to allow us to further assess the fit. Some business owners will request a personal meeting with you to meet and begin the relationship prior to giving out financial data. Other businesses owners are comfortable providing financials electronically without a personal meeting. Still others will simply prefer a conference call to break the ice and talk through some general information as a first step. We do not use a “cookie cutter approach” to this process and believe that respecting the individual preferences of the business owners leads to a much more productive and trusting level of communication.

Business Assessment
Your team at ABMI will assist as you assess the information provided by the business owner. We will apply our expertise and offer our counsel as you analyze the historical financial performance, customer diversification, market dynamics, operating processes, and future opportunities. We will research completed transactions of similar businesses to assist in the assessment of value.

Negotiation
The negotiating process is where a number of very good opportunities are lost. Negotiation is much more that flipping an offer and counter offer back and forth and keeping fingers crossed that the parties can meet somewhere in the middle. Unfortunately that is the approach some brokers apply. The negotiation process should begin the intermediary understanding the objectives of both parties and work toward creating a structure that can demonstrate to all stakeholders how their objectives are being met. Of course we have a fiduciary responsibility as your representative to work diligently toward negotiating the best deal for you, with over 25 years of negotiating experience; we find that hammering a deal through to a bloody end is not an effective technique.

Due Diligence
Due diligence is the stage in which the information provided to date is verified and researched. Your team at ABMI will facilitate this process and assist in the document management as your advisors review detailed documentation. If there are any surprises or concerns we assist to find a resolution quickly and efficiently.

The Value Proposition
Buying a business can be a challenging and time-consuming experience. Industry statistics provided by the International Business Brokers Association (IBBA) state that less than five percent of all registered buyers (those that network with brokers, accountants, lawyers, bankers, etc.) ever buy a company within a year. That means more than ninety-five percent of the people that are interested in buying a business are not successful. Most buyers are qualified and talented and may even spend a good deal of time looking, yet, less than five percent actually achieve their goal.

The ABMI-Mergers and Acquisitions Premier Buyer program is designed to increase your chances of success significantly. Our refined process will save you time and wasted energy. Our experience will allow you to leverage your efforts resulting in substantial savings.
Contact ABMI to learn more about our Premier Buyer Program. 913-341-6300