How Do I Buy A: Small Business

Before looking at listings, define your "buy-box" or target criteria.

This is a non-binding document outlining your proposed price, deal structure (cash vs. debt), and the timeline for due diligence. 4. Due Diligence how do i buy a small business

You will need specialized help to avoid costly mistakes. This team typically includes a business attorney , a CPA or accountant , and potentially a business broker . 2. Sourcing and Initial Screening Before looking at listings, define your "buy-box" or

Use online marketplaces like BizBuySell or DealStream , or work with brokers who have access to unlisted deals. you must determine its worth.

Analyze the Confidential Information Memorandum (CIM) , which is the seller's sales pitch. Look for "red flags" like owner dependency (the business can't run without the current owner) or vague financials. 3. Valuation and the Letter of Intent (LOI)

If the business looks promising, you must determine its worth.

Small businesses are commonly valued at 2x to 4x their Seller’s Discretionary Earnings (SDE) or EBITDA.