Lesson #2

Welcome to lesson #2 of “Learn How To Buy A Cash-Flowing Business In 5 Days.”

If you missed lesson #1 or want to refer back to it, you can find it here.

In today’s lesson, we'll cover where you can find the best opportunities. 

I’m going to show you the strategies I use to find both on-market and off-market deals, as well as the pros and cons of both approaches.

Let’s get started!

First, let’s talk about on-market deals.

On-market means a deal that is listed publicly, usually by a broker on a broker’s website or marketplace. Sometimes, sellers will list their business directly on a marketplace as well.

You may hear the term “on-market deal” and “brokered deal” used interchangeably.

There are tens of thousands of websites with businesses listed for sale. A couple of popular places I recommend browsing for on-market deals to start:

• Bizbuysell.com 

• Tworld.com 

• Acquire.com

• Websiteclosers.com 

Here’s a more comprehensive list of 500+ websites with businesses for sale that I put together. 

You’ll quickly realize that there are a lot of deals listed on these sites. That’s why every Tuesday and Thursday I also share the top 5 latest businesses for sale that I come across along with my breakdowns (be on the lookout!).

Next, let’s talk about off-market deals. 

Off-market deals are also referred to as “proprietary deals” or “exclusive deals.”

These are deals that are not publicly advertised or brokered, meaning you’re one of the first people to come across them.

In my experience, there are two primary ways to find off-market deals:

1. Cold Outreach

2. Intermediaries

Let’s start with cold outreach. This can consist of:

• Cold calling

• Cold emailing

• Cold messaging on LinkedIn

• Sending direct mail

• Physically walking into a business and speaking to the owner

Here’s the process I recommend starting with:

Step 1: Start by coming up with a list of 100 target companies. Use tools like Google, LinkedIn, Crunchbase, and Pitchbook to come up with a list of names of companies that fit your criteria. 

Step 2: Find the name and contact info of the business owner using tools like Zoominfo and Apollo.io.

Step 3: Start reaching out! Introduce yourself and see if the business owner is interested in selling his/her business. Talk about what you can bring to the table. 

Step 4: Follow up. I can’t stress this point enough. I recommend following up at least 3 times.

Step 5: Rinse and repeat. Make a habit of reaching out to new targets every single month.

Next, let’s talk about intermediaries. 

(No, I’m not talking about brokers).

What I’m referring to is people who work with a lot of business owners.

Think accountants, lawyers, and bankers.

These folks work intimately with small business owners every day. They likely know when someone is thinking about selling their business.

Start building relationships with these intermediaries and let them know that you’re looking for a  business to buy.

Now let’s quickly run through the pros and cons of on vs off-market deals:

Pros of on-market deals: 

• Seller is often more committed to selling. They’ve made a conscious choice to sell their business. They’ve already taken the first step of signing an agreement with a broker. 

• Broker may have already done work in terms of educating the seller on valuation expectations, common terms of deals, and the exit process. 

• There is likely a data room with detailed information about the business’s financials and key metrics already prepared.

• Deal may already have been pre-approved for a SBA loan by a bank.

Cons of on-market deals:

• More competition from buyers.

• It can be more expensive because of competition and because the seller usually has to pay the broker a substantial fee.

Pros of off-market deals: 

• Less competition from other buyers.

• Which may result in a lower purchase price or more favorable terms for the buyer.

Cons of off-market deals:

• It may take longer to close because the seller is less “warm,” as in they have not fully committed to selling their business.

• You may need to educate the seller on the exit process, valuation expectations, common deal terms, etc.

• Seller may not have materials prepared (clean financials, key business metrics)

As you can see, there are pros and cons to both approaches. However, if you’re serious about buying a business, I recommend incorporating both on-market and off-market searches as part of your strategy.

Well done! You’ve made it through lesson #2. 

Keep an eye on your inbox tomorrow for lesson #3 (or click here to dive in right away).

We’ll discuss how to finance a deal with little to no money down.

See you tomorrow!

-Helen Guo
Connect with me on Twitter/X or LinkedIn

P.S. Want me to help you find a business to buy in the next 90 days and handhold you through closing your first deal? Book a call.