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#10 | Where Do Buyers Actually Find Businesses to Acquire?

March 26, 2024
#10 | Where Do Buyers Actually Find Businesses to Acquire?

Last week I came across a study that I think I will just keep reverting back to over and over again because it was a gold mine of data and insights.  You can check it out here:

Search Investment Group 2023 Self-Funded Search Study

In the survey they worked with a couple hundred people looking to acquire a business and over 100 of them were successful in acquiring a business during the time covered by the study.  So it has a ton of real data from searchers looking to buy a business.  

Today I wanted to highlight how successful buyers actually found their acquisition.  

My philosophy has been to avoid businesses listed for sale and to avoid business brokers because I figured that means there will be more competition from other buyers + there will be broker fees which ultimately just increases the price the seller will have to charge in order to pay for the broker fee.  For a business the size I am looking for (less than $1 million purchase price) the broker fee will probably be 10% or more.  

After searching part time for the last few months here is what I am thinking:

  1. I still think trying to buy an unlisted business is a good idea, but it might take a decade!  I think I could reach out to a bunch of businesses that I would like to buy someday, and maybe the owner would be open to selling eventually, but that might be years down the road.  I still think it is worth planting those seeds because I think the best deals will probably come from unlisted businesses where I can build a long term relationship with the seller over a period of time until they are ready to sell.  
  2. If I really want to buy a business in 2025 I am probably going to need to open my search to businesses listed for sale and I am probably going to need to work with a business broker.  It would be really lucky if one of the unlisted businesses I am pursuing actually sold to me in the next 18 months. 

The data from this survey was helpful to see and clarify my thinking. 

How 100+ Searchers Found a Business to Buy

So based on this survey, you can see how successful searchers actually found a business to buy. 

Now they use some fancy sounding language here so let me translate

Transaction Intermediary - this means a business broker or business listing site like BizBuySell.  This means over 50% of these businesses were listed for sale. 

Proprietary Outreach - This is what I have been doing.  Basically just looking for creative ways to find potential businesses to buy, building a list, and then reaching out to them over email.  This is hard work, but it does work sometimes given that 25% of acquisitions used this approach.

Personal Network - There is definitely some upside to having a large personal / professional network on LinkedIn or Twitter. 

Other Intermediary - Not exactly sure what this means, but basically some other type of broker or business listing service. 

If you are going with the Proprietary Outreach path, I thought this stat was useful as well.  You can see that cold email is still the dominant approach here:

I think my takeaway is that I need to start some process for looking for businesses on business listing sites or through brokers as well if I want to increase my odds of closing a deal in 2025.  

I am curious, how are you trying to find a business to acquire? 

Until next week,


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