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