So, How Do I Actually Search For a Business to Buy?

Actionable Strategies to Get You Off the Sidelines and Into the Game

Author

Jed Morris
February 23, 2025

Most first-time buyers waste A LOT of time learning how to search for a business. Typically 3 - 6 months before ever speaking with an actual business owner while trying to figure out…

  • Broker Outreach

  • Off-market deals

  • How to be taken seriously

  • What they should actually be doing every day…

That’s a lot of time wasted. Time that could have been spent refining your search process, your deal box, and honing your negotiation skills.

So, if you are ready to get off the sidelines and “Start Searching”, here’s how I would do it:

  1. Know the Prerequisites

    • Read This Book: 'Buy Then Build' by Walker Deibel will give you a lay of the land and is a helpful way to get your bearings. You can find it on Amazon here: https://amzn.to/4cWK4Ha

    • Read This Book: 'HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company' by Richard Ruback and Royce Yudkoff, is the foundational guide for new ETA searchers. You can find it on Amazon here: https://amzn.to/4cWK4Ha

    • Read This Book: 'Buyer Beware: Lessons from Failed Business Buyers’ by Jed Morris. Yea, it’s my book (*inserts shameless plug*) and it’s available for pre-sale. Buyer Beware tells the true stories of business buyers who experiences bankruptcy and/or insolvency and how you can avoid their fate. Understand the risks: https://buyerbewarebook.carrd.co/

    • Read This Guide: 'Search Fund Primer' by the Stanford Graduate School of Business (GSB). The primer offers practical tips and templates for launching a search fund. You can find the primer here: Search Fund Primer | Stanford Graduate School of Business

    • Watch This YouTube Video Series: Veteran ETA by Charlie McCarthy is a must-watch beginner resource for anyone interested in the ETA process- especially veterans at top MBA programs. You can find it here: https://youtube.com/@veteraneta?si=1lefuLfaYzgHA0yS

      *Amazon links are affiliate links

  2. Become a “Qualified Buyer”

    • Build Your Personal Financial Statement. Step one to launching a successful search for a business is getting your PFS in order. Let’s face it, buying a business takes money- no matter what the online gurus tell you.

      The vast majority of self-funded searchers will be using the SBA 7a loan program to fund their purchase. Qualifying for an SBA loan is relatively easy and requires little more than a 670 credit score.

      That said, qualified buyers make sure that, before they speak to brokers and potential sellers, they have a firm grasp of how much money they can bring to a deal. The SBA requires the buyer to put a minimum of 10% down on the loan- which can be as much as $500,000 for a $5 million-dollar loan.

      That’s a great deal, but you still need the money! Some people pull funds from their retirement account or 401k. Others, refiance their homes or take out an equity line of credit. You can reduce your capital requirement by having a seller’s note on full standby for 24+ months and/or raising money from equity investors.

      Regardless of how you get the money, a strong personal financial statement that shows that you have good-to-great credit and funds available to actually close on a business purchase will set you apart as a Qualified Buyer in a world full of broke tire-kickers.

  3. Develop a Broker Outreach Strategy

    • Build Your Broker Network. When a business owner decides to sell, they typically contact a local business broker or M&A Advisor they know. To keep things simple, we’ll call anyone who represents a seller “brokers”.

       

      There’s no legal certification or requirement to become a broker so anyone can call themselves a business broker. As a result, some brokers are terrible and some are excellent- it’s up to you to get out there and meet the good ones.

      Good brokers can do a lot for you:

      1. Set expectations with business owners about the buying process and valuations to expect

      2. Vet buyers to ensure that they’re not wasting seller’s time with unqualified tire-kickers

      3. Help business owners become comfortable with selling, thereby greatly reducing the risk that the seller will bail on the deal at the last minute

      *Keep in mind, business owners are paid a commission earned from the sale of the business. Therefore, they work for the seller.

      That said, you shouldn’t approach brokers from an adversarial position. Good brokers aren’t interested in chasing away qualified buyers- they’re interested in closing sales at a fair value for the seller.

  4. Build an Off-market Strategy

    • Build Your Proprietary (off-market) funnel. You hear a lot online about how amazing off-market deals are. And, while it is possible to find a ‘hidden gem’ cheaper than you might if it was represented by a broker, proprietary deals come with their own challenges.

      1. You’re reaching out to business owners who are not actively looking to sell. Therefore, there’s a MUCH greater risk of them getting cold feet at the last minute leaving you with ‘dead deal’ costs.

      2. Off-market business owners may have wildly unrealistc expectations of what their business is worth and/or how long a transaction will take. It’s up to you as the buyer to educate them on that while also moving forward with the deal.

      3. Businesses that aren’t actively looking to sell are hard to contact. Owners are wary of having conversations that could leak to employees, vendors, or customers. Furthermore, much of the business’s information is not readily available. With a broker, at least you have a general idea of the revenue and profitability before engaging with the seller. In an off-market deal you likely know nothing until you’ve engaged with the seller and they’ve given you that information.

      * The point here is, proprietary (off-market) search is hard and takes a lof of time with no guarantee that you’ll get a ‘better deal’. That’s why I recommend a combined approach. Build out your broker network while building your off-market funnel.

      So, how do you build an off-market funnel?

      There’s a million ways to do it. Many searchers start by pulling publically avaialble data on businesses in their search region by NAICS code. For instance, every corporation is required to register with their Secretary of State and those records are public. So, if you wanted to pull a list of all registered businesses with a landscaping license, you could do that.

      But so can everyone.

      I’ve also seen searchers scour SBA and PPP data looking for promising businesses in their buy box.

      Some searchers build online funnels and paid ads (much like how real estate investors do) to get the attention of small business owners. Think, “We Buy Ugly Houses” but without the negative connotation.

      You could also simply google businesses on Google Maps and search. As you can see, there are many ways to search off-market and it’s a long process. That’s why it’s call “Searching”.

  5. Start Speaking with Business Owners

    • Start Having Conversations With Sellers. There’s a lot about searching that can only be learned by….you know…searching.

      You need to start having conversations with sellers so that you can begin to understand how to:

      1. Emphathize with them

      2. Ask the right questions

      3. Listen for clues that can inform you on the integrity of the seller and profitability of the business

      So much of ‘buying a business’ has nothing to do with financials and valuations and EVERYTHING to do with EQ- your emotional quotient. People do business with people they like and sellers regularly accept lower offers to sell to buyers that they actually like. Putting in the reps by speaking with owners will help develop you into the person that sellers want to sell too.

      So, Are You Ready To Kick-Start Your Search?

      If so, join me tomorrow evening for the first ever 'Start Searching Challenge!

      Here’s what we’ll cover⤵️

      👉🏼 How to set yourself apart as a professional buyer

      👉🏼 Effective broker outreach and sourcing

      👉🏼 Discover how to create and build off-market deal flow

      👉🏼 Learn how to speak effectively with business owners, brokers, and professional service providers

      👉🏼 Lead sourcing ➡️ Letter of Intent (LOI)

      Then, TAKE ACTION!

      The goal of the challenge is to give you the tools you need to get off the sidelines and into the game.

      So, are you ready to become a Searcher?

      Join me Monday, February 23, from 7-9pm EST for only $97.

      I’ll answer all of your questions and provide actionable tools to get you started.

      Here’s the registration link: https://startsearchingchallenge.carrd.co/

      See you there!

      Jed