Business For Sale

Start by writing how much money you can invest and borrow, how much time you can give each week, and what skills you bring. A business for sale that needs 60 hours a week will not work if you only have 20. Decide whether you want an owner-operated business or a semi-absentee one.

List the industries you understand and the ones that would require you to learn fast. Also decide your travel radius. Buying a business 200 miles away sounds fine until you need to be there five days a week.

Tip: Write your budget and time limits down. Sellers and brokers will push on both, so a written line makes it easier to walk away.

Most US listings sit on a handful of major sites, but local brokers, industry associations, and trade publications also carry deals that never make it to the big sites. Search all of them. Set alerts so you hear about new listings the day they post.

Read listings with a skeptical eye. Phrases like "owner will train" or "great opportunity" are filler. Focus on revenue, profit, employee count, lease terms, and reason for selling. If a listing hides the most basic numbers, treat that as a warning sign.

Keep a simple tracking sheet: business name, price, revenue, profit, location, reason for sale, and contact. After 20 or 30 listings, it will be the only way to keep them straight.

Tip: Ask each broker the same five questions so you can compare listings fairly. Mixed question sets make deals look better than they are.

Before you spend hours on a deal, run a fast screen. Pull the business's public reviews, check the address on a map, look up the owner in state business registries, and search the name for lawsuits or news. This takes about 15 minutes per listing and kills the worst ones early.

Check three things in particular: the lease end date, whether the seller owns or rents the space, and whether key employees are staying. A great business with a lease expiring in six months is a bad deal unless you can renegotiate.

If the business depends on one or two customers for most of its revenue, flag that now. Concentration risk is one of the most common reasons a business is cheap.

Tip: Call the landlord before you fall in love with a location. A landlord who will not renew or raise rent too much can erase your profits in year one.

Once a listing passes your screen, sign the non-disclosure agreement (NDA) and request the full information packet. That packet should include profit and loss statements, tax returns for the last 3 years, balance sheets, a current rent or lease, and a list of assets and debts.

Match the numbers across documents. If the profit and loss statement shows strong profit but the tax return shows almost none, ask why. Do not accept a verbal explanation — request the supporting documents.

Add back owner perks carefully. A seller's "true profit" may include personal cars, travel, and family payroll. Only add back items you could realistically remove without hurting the business.

Check first: If the seller will not provide 3 years of tax returns, stop. Without that paperwork, you cannot trust any other number in the deal.

Small businesses are usually valued as a multiple of Seller's Discretionary Earnings (SDE), which is net profit plus owner pay, perks, and one-time costs. Multiples vary widely by industry and size. For a rough sense, small service businesses often trade at 2x to 4x SDE, while larger or more stable ones can trade higher.

Compare the asking price to similar listings and recently sold businesses in the same industry and region. Your CPA or broker can help you find comparable data if you do not have it.

Send a written letter of intent (LOI) with the price, what is included, the deposit amount, the due diligence window, and how the deal closes. The LOI is usually non-binding, but the deposit terms inside it often are.

Tip: Keep the due diligence window long enough to finish real work: 30 to 60 days for most small businesses, longer if real estate is involved.

Due diligence is where most deals fall apart, and that is healthy. Your attorney should review entity records, contracts, licenses, and any pending lawsuits. Your CPA should verify the financials against tax returns and bank statements.

Check these items in writing: equipment condition, vehicle titles, software licenses, trademarks, customer contracts, employee agreements, and any loans or liens. Ask for a UCC search and a lien search to confirm nothing is pledged elsewhere.

If the business has employees, review payroll records and confirm who is staying. If it has online accounts, verify ownership and transfer rights well before closing.

Check first: Do not rely on a seller's verbal promise that "everything is transferable." Confirm the transfer in writing with the platform, landlord, or licensing agency.

Use what you learned in due diligence to renegotiate. If revenue is lower than promised, ask for a price cut. If key equipment is worn out, ask for a repair credit. If the seller's own numbers changed, the price should change too.

Common terms to negotiate: price, deposit amount, seller financing, training period, non-compete, non-solicit, and a transition plan. Seller financing is common in small deals and can replace part of your bank loan.

Get every agreement in writing. Verbal promises made in a meeting are usually unenforceable, and a strong written agreement protects both sides.

Tip: Aim for a 30 to 90 day transition where the seller stays on. That period is the difference between a smooth handoff and a rough one.

Work with your attorney to prepare the purchase agreement and schedule closing. Before money moves, confirm the deposit is held in escrow or that transfer terms are safe for both sides.

At closing, sign the purchase agreement, transfer the assets, and hand over the accounts and keys. Get the seller's signature on non-compete and transition documents. Then make sure all licenses, bank accounts, and utilities are in your name before the seller walks away.

The first 90 days matter most. Meet your team, contact top customers, and fix the small problems before they grow. Keep the seller's phone number handy during this window.

Tip: Keep a written 90 day plan. Businesses often dip after a sale, and a clear plan keeps the team and customers steady.