The final steps to acquiring a company are very important. Do them well, and you’ll be the proud new owner of a business.
This is the third and final episode of an invaluable series where Roland Frasier has been walking us through some important questions to ask when buying a business. All three episodes are important, but this one in particular will help you finish strong.
Listen in, take notes, then go connect with Roland on social media (Instagram, TikTok, LinkedIn). He’d love to hear what you took away from these episodes and what you’d like to hear next on the podcast.
In the previous episode, you were finding common touchpoints and building rapport with the owner of the business you want to acquire. You showed interest, asked questions, got them talking, so you could take notes to help you craft an offer.
Once you’ve had that conversation, the next set of questions is more specific. Roland has a target data information sheet he fills out. You don’t need a financial statement to get these questions answered. Here are some of them:
The reason you ask that last question is because you want them to get excited about life after business. Then you’ve built a common goal.
A lot of people believe businesses to acquire can be found through online and offline brokers of businesses. The truth is, those are really the worst deals. Here’s why. Think about when you list a house. You’re emotionally invested in it, so you typically think it’s worth more than it really is. When someone goes to a broker to sell their house or business, the broker will say, “What do you want for it?” They’ll either say, “I don’t know” or “I want x.” The broker has to think of how to keep the seller’s expectations reasonable and get the deal. There’s a compulsion to let someone list something for sale at a higher price than they can actually get for it. You’re fighting against a seller’s expectation. Plus they need to get enough to pay the broker. If you have someone who has received multiple offers they’ve turned down, that will be helpful for you, but you’re still going to pay the highest price the broker can get.
Wouldn’t it be better if you could get off-market deals that aren’t listed? Or deals that were listed but the listing expired? They’ve gone through the “expectation curve” process and are much more reasonable in what they’ll accept. Keep in mind that 80% of businesses listed do not sell.
Roland recommends finding businesses organically. You’re probably not going to find businesses by running an ad. Most of this happens through word of mouth and networking. The more you meet people and tell them what you’re doing and what you’re looking for, the more likely it is that you’ll meet someone who knows someone who can refer you to someone who has that business you’re looking for.
The more you plug yourself into the industry you want to acquire a business in, the more likely that you’ll get referrals. Referrals are the best, because you’re getting introduced to the person with someone’s arm wrapped around you saying, “This is a good person to do business with.” Letting your whole world know is the best way to start.
If you’re doing cold outreach, there are several things you can do. The easiest in the U.S. is to go to secstates.com. This site lists all 50 Secretaries of State where filings of business entities are done and registered.
You can also find businesses on hoovers.com or zoominfo.com. Names, phone numbers, and addresses are often available. Call the company, ask who the owner is, and say you have to send them some information. Or go to the website and look at the About Us page or Team or Contact Us. You can also Google information about business licenses. Then send them information like Roland talked about in the previous episodes.
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