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10 Things to Do to Buy a Business Through a Broker

When Coco talked to two business brokers, Tony Calvacca and Marsha Barnett-King, a few weeks ago they gave her a lot of great content about how to buy and sell businesses using the little known group of professionals called Business Brokers. This list is designed to give you insight into the world of business brokers and how you can purchase and run a business of your own!

BrokerFind a business broker.

Look up your local business broker’s association, and give them a call. Ask for referrals.

Listen to Marsha Barnett-King tell you how

ConfusedUnderstand what you’re getting yourself into.

Chances are, if you’re a first-time buyer, you’ll freak out and run.

Listen to Tony Calvacca tell you why

PlanHave a clear plan.

Make sure you know what kind of business you want to buy and that you know how to run it (or know someone else who does).

HierarchyDecide whether or not you want to run the business.

If you want to be more hands-off after your purchase, make sure there is a good enough management team in place. Make sure the employees will stay once the business changes hands.

Listen to Marsha Barnett-King tell you why

Listen to Marsha Barnett-King tell you why

Thumbs DownDon’t be like these buyers.

Don’t be like the many so-called buyers who don’t know what they want, or don’t know what they’re doing. Do your research, and present yourself in a way that shows you know what you’re doing and that you’re a serious buyer.

Listen to Marsha Barnett-King tell you why

Price TagDecide which market to buy into.

Do you want to buy a main street business or a business in the lower mid-market? Main street businesses are more common, but generate less revenue. Businesses in the lower mid-market bring in more cash, but the up-front costs of buying one are much higher.

Listen to Tony Calvacca tell you why

Listen to Marsha Barnett-King tell you why

Money BagTake advantage of the leveraged buyout (LBO).

Professional investors buy companies through LBOs – purchase price financed with a loan on the business assets. Business brokers can make this available to smaller investors if the business is lend-worthy.

Listen to Tony Calvacca tell you why

BankGet financing.

There’s money out there for people who want to buy a business. Small banks with aggressive lending tactics, non-bank lenders and other non-traditional lenders will often lend money to a buyer based on the previous cash flow of an existing business (provided the cash flow is strong and consistent). Business brokers know how and where to find this type of lender, so work with them to figure out what your options are. (Also, check out Lendio for other lending options. More to come on that later…)

Listen to Tony Calvacca tell you how

Balance SheetCheck the financials.

Make sure the seller has kept detailed and accurate financial statements.

Listen to Tony Calvacca tell you why

ContractGet a lawyer.

You’ll need a corporate lawyer with deal experience to write, read and negotiate your contracts.

Listen to Tony Calvacca tell you why

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