The SMERGERS Blog

How to Find Companies For Sale

Sun 11 Feb 2018

Buying an existing business from an owner who’s retiring, relocating or cashing out is a great way to become an entrepreneur. Buying is particularly interesting as most of the legwork is already done by the existing business owner. Plus, you don’t have to go through the long process of figuring out a business model that works, monetization techniques, etc. and go straight to expansion and growing profits.

 

Before you start searching for companies for sale, it’s important to be clear on what kind of a company you want to buy, as the strategies for finding them would be different. Depending on your strengths, experience and requirements, you should think about the following –

  • Industry and domain - What industry are you looking at? Depending on your skillset and experience, you have to zero-in on which domain you want to get into.
  • Size of the business - While you might be tempted to buy companies which are growing rapidly and profitably, they often come at a cost. Many entrepreneurs end up buying business that have a big scale (in terms of revenue, team size, etc.) without actually having the ability to run it. You have to understand the size of the business you can successfully buy
  • Stage of the business - Are you looking for a business which has shown stable profits over the past few years, or one that’s growing its’ revenue rapidly but is yet to break even? Do you want something pre or post product-market fit? Having clarity on the same will help streamline the search

 

How to find companies for sale

Most business owners do not openly discuss about selling their business. Some of them may not even think of selling, unless someone makes an offer the entrepreneur is willing to accept. Typically they use confidential mediums such a trusted broker or online platforms such as SMERGERS to reach out and connect with relevant parties who may acquire their business. It is important to keep this information private so that employees, customers and suppliers do not become nervous about a change in ownership. So while finding companies for sale, it’s important to keep in mind that the best ones are hidden beneath the surface.

 

Having said that, here are a few ways buyers try to find businesses for sale

  • Identifying businesses and directly calling business owners - While this seems like a reasonable approach, it’s typically not the preferred approach as business owners shy away from openly discussing their business for sale. If you want to follow this approach you can avail the services of a middle man who can connect with the business to understand their strategic interests and accordingly introduce you both. At SMERGERS we help our clients to assess the interest level before making introductions between parties.
  • Industry networking events and conferences - All industries have a local body which meets frequently to discuss challenges and the way forward for the industry. Attending such events and networking with business owners help a great deal in understanding the market conditions and reasons why anyone would look to exit.
  • Through auditors/lawyers whose clients might look to sell - This approach was the most common approach before internet became popular. Reaching out to lawyers and auditors has also proven to be a good way to find companies for sale as they may have clients who’re looking to exit from their business.
  • Online Mergers & Acquisitions Websites - While there are several business listing websites, very few of them like SMERGERS provide you a confidential and secure mechanism to help business buyers find and connect with business owners who are seeking to sell their company.
  • Hiring a Business Broker - Business brokers specialize in buying and selling of businesses. You can reach out to business brokers who operate in your domain and avail their services. Most business brokers use online platforms to find companies for sale, but will eliminate the hassle of going through all the data by yourself and also hand hold you through the entire process till completion of transaction.

Pro Tips

Finding companies for sale and completing the transaction is not an easy task, so we’ve compiled a couple of tips that can help you with the same.

  • Don’t be over enthusiastic - The process of buying a company takes time. Finding SMBs for sale is tricky as most business owners are secretive about their interest in selling their company. Also, business owners are always courted by enthusiastic buyers who lose interest quickly, so use a calm approach when talking to business owners
  • Talking directly to business owners - Over time, it’s been proven that talking directly to business owners increases the chances of sale, over working with middlemen and intermediaries. Once introduction is made, keep the conversations directly between you and the business owner, unless it is really required to go through the middleman.
  • You’ll lose the deal unless you know how to put together a worthwhile bid - Many times, buyers find sellers in domains they’re interested in, but lose the deal as they couldn’t put together a winning offer. Even before you find the company you’d like to buy, work with your team (of bankers, lawyers and auditors) to learn and understand exactly how to make a bid, including valuation of companies, due diligence required, financing arrangements for the buyout, etc.

Online mediums are fast emerging as a default medium to find companies for sale from across the world. You can browse the list of companies for sale on SMERGERS here.

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