Howdy B&I board,

I have been thinking more and more, and I believe my (personal) best path from transitioning from the corporate world to entrepreneurship would involve me buying an existing business vs starting my own. I am doing my own research on the matter, but figured there may be some useful tips/tricks or books/educational resources this group may be able to recommend to narrow down the search and sort through a lot of the stuff that is just a "buy my course" that is out there.

Anything from how to locate and value a business, to different ways to negotiate funding, to anything else that may need to be considered when you buy your first business (legal, tax, etc.)

Thanks in advance!

I haven't personally bought a business but have been a part of several transactions. Finding them is hard. I am in your same boat… I'd like to find a small business to acquire as well.

Short of picking up the phone or walking in and asking the owner to lunch, I'd suggest contacting what's called a "buy side" broker for the specific industry you're targeting. For example, in equipment rental there are numerous firms that do nothing but source buyers and sellers of equipment rental companies. I'd look for a niche broker of businesses in the industries you're looking into.

Regarding the debt/equity portion of an acquisition… you may look into SBA loans. I'm sure someone here knows more than me but I believe they only require 10% down. If you go through a traditional lender, there will most likely be a 20%+ equity requirement plus covenants on the debt. A challenge with SBA loans is that the 10% down may give you enough rope to hang yourself a couple times…

This is a deep subject. It'd be fun to keep the conversation going.

that's a good call. Al Danto used to teach a great class on enterrice acquisition.

A couple folks in my class ended up buying the business they profiled for their projects.

You can acquire my business. I'm dead serious.

MillionaireSock said:

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Howdy B&I board,

I have been thinking more and more, and I believe my (personal) best path from transitioning from the corporate world to entrepreneurship would involve me buying an existing business vs starting my own. I am doing my own research on the matter, but figured there may be some useful tips/tricks or books/educational resources this group may be able to recommend to narrow down the search and sort through a lot of the stuff that is just a "buy my course" that is out there.

Anything from how to locate and value a business, to different ways to negotiate funding, to anything else that may need to be considered when you buy your first business (legal, tax, etc.)

Thanks in advance!

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I have bought two businesses and started a third, though it wasn't much and sort of fed off one of the others.

I agree with buying an existing business vs starting your own, as long as you can buy it at a good price. Finding someone who is ready to get out is the way to go. But it is not easy to find an existing business. It is even harder to find one in your locale, so unless you are ok with relocating, your options are more limited. In one of my purchases, I was an employee so buying it was no big deal. I had a motivated seller due to his age, the clients had come to know me, I had a good idea of what the business was worth. All in all it was a pretty easy transition. Also, I knew the business having worked in this one and similar ones in my career.

The second purchase was a type of business I was looking for and I found the owner in the appraisal district records (they never answered the phone and eventually the voice mailbox was full) and it was evident they were very interested in selling. I had never been involved in this type of business, though it was not rocket science, but I had two clients who were involved in the same type of business and they mentored me.

I have looked at other things, to buy or to start up, but never pulled the trigger. I would never consider any sort of food place, a place with inventory, or a business requiring more than a couple employees. That further limited my options. I sold the first one about four years ago, and will put the second one up for sale in a few months.

Leaving the corporate world, where you are an employee, and going into business for yourself is an eye opener and even more of an adjustment if you have not been involved in the type of business you are buying. Typically the hours are much longer for the first five or so years. Just be careful not to do a deal just to do a deal. That might seem stupid to say, but I have seen others do it, overpay, or get into something they should not have. Set your criteria, figure out what you are willing to pay, and if you cannot make a deal, move on to another one.

Good luck to you!

theeyetest said:

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You can acquire my business. I'm dead serious.

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Info/details?

Read the book "Buy Then Build". It's great and covers everything you need to do. It also outlines why buying rather than starting from scratch is a way better bet. Good luck!

theeyetest said:

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You can acquire my business. I'm dead serious.

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Would like to hear more about what you do.

H-town ag said:

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theeyetest said:

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You can acquire my business. I'm dead serious.

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Would like to hear more about what you do.

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I own a used truck dealership in Dallas. We specialize in selling used 18 wheelers.

infinity-trucks dot com. Check out our website. We also finance and are not a buy her pay here lot.

This is a massive undertaking when you first consider it, and you'll hear plenty of horror stories about people who failed miserably. But don't let that scare you off! The one thing most of those failures have in common is that the owners didn't prepare properly for a life-changing decision.

In my opinion, the absolute most important thing you can do is build a team of experts around you, and let them do their jobs. While at the same time remembering that they have no skin in the game, and you ultimately have to make and then live with your own decisions.

You need an accountant that understands small business financials, a business attorney that specializes in transactions, a handful of acquisition financing resources, a wealth manager or CFP that understands the long-term tax-planning implications of small business ownership, and, selfishly from my perspective, a buy-side business advisor that can guide you through the entire process.

Once you have your team assembled, then you can really start to understand and determine what your "box" looks like and the criteria of your business search.

Also ... here's a great book written by the guys that head up Harvard Business School's ETA program ... admittedly, I'm partial to this one because one of the case studies in the book is a business I represented and sold in Dallas - but it's a really insightful book either way.

HBR Guide to Buying a Small Business

And if you ever want to pick my brain about this process, get referrals to help assemble your team, or just get on my distribution list for new business listings, drop me an email or give me a call ...

Good luck!

Following. I am in dfw and beginning this process.

Friend of mine started from scratch on this road. Didn't know what type of business he wanted to get into, just knew he wanted to be an entrepreneur. This is his advice for people going down this road:


I would start with these resources first. They are the building blocks of knowledge and open gates to thousands of others who have gone down this path.

Books Buy then Build by Walker Diebel and How to buy a Small Business by Harvard Business
Podcasts Acquiring Minds, Acquisitions Anonymous, How 2Exit, Think like an Owner
Online Forums SMB Twitter and Searchfunder.com

I wouldn't consider buying an existing business being an entrepreneur.

Not that it realllllllllllllllllly matters (as I think most people would roll their eyes at anyone who goes out of their way to describe themselves entrepreneur no matter the definition), and definitions vary -- but I think starting or creating the business is a key aspect of being an entrepreneur.

If someone takes over their father's business when they retire, are they an entrepreneur?

But again, end of the day doesn't really matter.

The man who originally coined the term entrepreneur, Jean-Baptiste Say, described an entrepreneur as someone who takes economic resources from a lower to a higher level of economic productivity. Combine that with the more modern textbook definition that includes the idea of owning and operating a company, and I think that's what meets the standard.

I'll agree that it's about creating. The process of creation for both the founder and the acquisition entrepreneur are the same.
- Get some capital
- Use that capital to gather up some stuff that other people invented
- Add in some of your creativity
- Try to use that combination to make a good return on your investment

Whether you had to found a new company as part of this process is kinda arbitrary.


Regarding the generational business thing, it depends.

"Taking over your dad's business" often involves some combination of raising or borrowing money (or spending money you've acquired elsewhere) to get ownership. And most 2nd+ gen owners I know want to do bigger and better things with the company and take a lot of risk to make it happen. This person sounds like an entrepreneur to me.

Someone who gets it gifted to them through clever estate planning and just wants to ride it out... probably more accurate to call this person self-employed. I know a lot of people who founded their companies that fit this description as well.

After a little thought I think a key question is whether or not you are creating.


Like you said it doesn't really matter.

Agree, and if you can find a business whose owner is willing to finance, that's huge. Also, try to line up a good line of credit. If you have any assets that can be used as collateral, that's a big help.

Good luck and enjoy your divorce from the corporate world.