Max Friar’s Top Tips for Successfully Buying A Business

Having worked years with sellers of small businesses, these are the top bits of advice I can give to a prospective buyer:

  1. Keep in mind the Seller’s top concerns, which are almost always these and in this order:
    1. Cash at Closing.
    2. Continuity of Business (employee job security and growth in particular).
    3. Legacy, or how they believe their transition will reflect on them.
  2. Be persistent. There are 15 buyers for every listed business. Only 10% of would-be buyers will ever purchase a company*.
  3. Consider going directly to owners. 90% of transactions happen quietly with no middleman. Many owners do not want to go through a brokered process.
  4. Talk to lenders first. It makes little sense to start looking until you know the size/range of businesses to look at. Make sure to be responsive to lenders’ requests; they will judge you on this.
  5. Stand out. Consider sending your credit score and personal financial statement to the broker early on. Because brokers know that most buyers will never pull the trigger, this is a good hack to get their attention.
  6. Do not try to do the entirety of your due diligence before writing an offer. This is a big turn off for brokers and sellers.
  7. If the business is a good fit, then write an offer! During due diligence, you can send your pages of questions.
  8. Culture is a big deal in West Michigan.
  9. Use a team of advisors that does deals, particularly your attorney. If you try to save every nickel in an acquisition, it will only cost you later.
  10. Expect that the deal might “die” along the way. It doesn’t mean that it’s dead! Both buyers and sellers tend to get very emotional during the process, often in ways that they do not understand or expect. If a seller says or does something irrationally or emotionally, especially in the 11th hour, just give them 24-48 hours to cool down.

*https://www.diomo.com/industry-statistics-that-every-buyer-needs-to-know.html

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