Buying a Business: A Business Broker’s Playbook

By William Ilgenfritz, Business Broker

Buying a business isn’t just about making a purchase—it’s about making the right purchase. Whether you’re looking to leave the 9-to-5 grind, diversify your portfolio, or pursue a passion project, the process of buying a business can be a game-changer. But it’s also a big decision that requires strategy, patience, and the right guidance. Let’s break it down, step by step, so you can walk into the deal with confidence.

Steps to Buying a Business

1. Start With Your Goals

Before you even start looking at businesses for sale, get clear on what you’re after.

Ask yourself:

● What industries or sectors excite you?

● What’s your risk tolerance?

● How much time, money, and energy are you willing to invest?

Knowing your "why" makes it easier to find a business that checks the right boxes—and avoids wasting time on ones that don’t.

2. Find the Right Opportunities

Finding a business is like house hunting. You’ll need to look at a lot of listings before you find the one.

Here’s where to start:

● Online Marketplaces: Sites like BizBuySell can give you a sense of what’s out there.

● Industry Networks: Let your professional network know you’re in the market.

● Work With a Broker: (Hint: That’s where I come in!) Brokers often have access to listings you

won’t find online.

Pro Tip: Don’t just look at the price tag. Pay attention to the business’s reputation, market position, and growth potential.

3. Do Your Homework (a.k.a. Due Diligence)

This is where you roll up your sleeves and dig into the details. Due diligence is your chance to confirm the business is everything it claims to be—or find red flags before it’s too late.

What to review:

● Financial Records: Look at tax returns, profit and loss statements, and debt obligations.

● Customer Data: Who are the customers? Is the business retaining them?

● Contracts and Liabilities: Any lawsuits, supplier issues, or unpaid obligations hiding under the

surface?

4. Nail Down the Valuation

How much is the business worth? Spoiler alert: it’s not just what the seller is asking.

Here are three common methods:

● Income-Based Valuation: Looks at profitability (e.g., discounted cash flow).

● Market-Based Valuation: Compares similar businesses recently sold.

● Asset-Based Valuation: Assesses the value of equipment, property, and other tangible assets.

If you’re not a numbers person, hire someone who is—a professional valuation can save you from overpaying.

5. Make Your Offer (With a Letter of Intent)

Once you’re confident the business is a good fit, draft a Letter of Intent (LOI). This document shows the seller you’re serious and lays out the proposed terms, including:

● Purchase price

● Payment structure

● Contingencies (e.g., financing approval)

● Timeline for closing

Think of the LOI as a handshake agreement—it’s not legally binding, but it sets the stage for negotiations.

6. Negotiate Like a Pro

Negotiations aren’t just about the price. Other factors, like transition support, inventory, or seller financing, can make or break the deal.

Tips for successful negotiation:

● Focus on Win-Win Outcomes: Both sides should walk away feeling like they gained something.

● Be Firm, Not Aggressive: Confidence is key, but keep it professional.

● Leverage Expertise: Sellers respect buyers who understand market value and realistic terms.

7. Secure Financing

Unless you’re paying cash (lucky you!), you’ll need a plan for financing.

Options to explore:

● SBA Loans: Backed by the Small Business Administration, they’re great for first-time buyers.

● Seller Financing: The seller acts as your lender—this is surprisingly common.

● Traditional Bank Loans: Require strong credit and a solid business case.

8. Finalize the Purchase Agreement

The purchase agreement is where the rubber meets the road. It’s legally binding and outlines every detail of the sale.

Make sure it includes:

● All terms and conditions

● Asset transfer details

● Noncompete clauses to protect your investment

Don’t skip a lawyer—this is not the time to wing it.

9. Close the Deal

This is the big day. Once all the paperwork is signed, you’re officially a business owner. But don’t pop the champagne just yet—there’s one more step.

10. Transition and Take Over

A smooth handoff is critical to keeping the business running without hiccups.

What to focus on:

● Building trust with employees and customers.

● Learning the systems, processes, and quirks that make the business tick.

● Identifying quick wins to maintain momentum.

Key Considerations for Success

● Build a Team of Pros: Don’t go it alone. A broker, attorney, and accountant are worth their

weight in gold.

● Pay Attention to Details: Read every document (or have someone else do it).

● Stay Level-Headed: Buying a business is emotional, but don’t let feelings drive your decisions.

Buying a business is a big leap—but with the right steps, it doesn’t have to feel like a shot in the dark.

Remember, preparation is everything. The more you know going in, the smoother the process will be.

Take your time, do it right, and when you finally own that business? It’ll all be worth it.

Ready to find your perfect business? Let’s talk.