It Should Never Take More Than 6 Months To Buy A Business
March 15, 2025
by a professional in Boca Raton, FL, USA
I've been part of the Searchfunder.com community for over one year - it's a terrific platform and I enjoy reading all the posts. I am however, completely baffled by reading comments from so many people who have been trying unsuccessfully to buy a business for a ridiculous amount of time.
Barring extenuating circumstances with delays in financing or surprises in due diligence, the timeline should never be more than 6 months to find a good business, negotiate the deal terms, complete the due diligence, and close the transaction.In the 30 plus years I've been in M & A, our firm has dealt with over 100,000 individual buyers like the members on this platform. I have also purchased 13 of my companies plus one co-investment, so I have gone through exactly what you are trying to accomplish.
We have incredible data sets and KPIs on the business buying process. Here's some for you based on tens of thousands successful transactions:
- You need to meet with 10 sellers/month - minimum. Not phone calls or calls with brokers. Face-to-face seller meetings (virtual meetings if there is a geographical issue).
- If you are looking part-time, you must devote a minimum of###-###-#### hours/week to this project
- The average time to find the business you will acquire is 4 months
- You need to meet with 40 sellers over that period
- You have to average submitting 4 LOIs to get one signed and closed
- You should have no more than 4 target categories of business types you want to pursue
That's the formula.
One of the biggest mistakes we see repeatedly from people who have never bought a business is their approach. Most people spend countless hours searching endless business for sale listings, or sending out a ton of ineffective emails trying to figure out which, if any business is right for them. It's the complete ass-backward approach. FIRST - you need to determine what type of business is right for you, then, it is so easy to find and buy it. We have a video that will help you - go to https://richardparker.com/free-educational-videos/ and watch the one: 'What's the Right Business for You to Buy and How to Find It!' This was an educational webinar we did with a bunch of members from the Searchfunder.com community.
We have a proven methodology to successfully and effectively navigate the business-buying process, and we know it works because 82% of our clients buy a good business within 6 months.
Richard Parker
from Villanova University in Miami, FL, USA
in New Jersey, USA
Starting with sourcing deals, evaluating different types of businesses and their revenue generation models to decide which ones you like and have the ability to manage. This step alone will blow your mind as you learn about all the different types of businesses out there - many you never even heard of! If you are an entrepreneur with "shiny object syndrome" good luck on narrowing your business selection down to just 4 industries.
Next is the process of dealing with brokers and learning how to do the pre-LOI dance. Requesting the CIM and navigating the different broker temperaments can be surprising to n00bs who are expecting the process to go the way they read in the HBR Guide, Buy Then Build, or even in Richard's course - all of which I have read. Some brokers are very easy going and make you feel like this is going to be a smooth process, then there are the cowboys that run a totally different process and want your blood-type and first born child as a sacrifice just to get the CIM. It takes a couple of times around the Mary-go-round to learn how to deal with those kinds of brokers comfortably and confidently without taking their perceived "gate keeping" personally.
Ok, so now you have the CIM (or maybe you don't) - you have financials for the past 3 years (or maybe you don't). What do you do? Again, knowing how to deal with these various scenarios only comes from putting in the reps - and that only comes with time. I have seen all kinds of broker's packages from beautiful multi-page presentations with monthly numbers going back 5 years to a single spreadsheet for TTM with 5 lines - revenue, gross profit, net income, total add-backs, and SDE. When you're first starting out and following the acquisition process described in the books and podcasts, you won't know what to do with such seemingly scant information. It's takes time for you to get comfortable with knowing how to glean pertinent information from the listing/teaser and combine it with that spreadsheet to model it and come up with an offer range.
The seller's meeting - if you are not a naturally charming and charismatic person (like me...lol), you may find it unnerving speaking to a total stranger about yourself, your reasons for wanting to acquire their business, and why you are qualified to run it. You need a few "at bats" to get comfortable with speaking to gentlemen/women who are most likely older than you and from a different generational mindset. This is a necessary part of the game so you need to get those reps in as quickly and as often as possible - even on businesses you know you do not want to acquire.
Now, you have finally found a business you are comfortable with and you want to put in an LOI. This is the stage where the notion of expecting the acquisition process to fall within a specific timeline falls apart. Maybe in the past, 6 months would be feasible to conduct a search and acquisition, but in this current environment there is an absolute feeding frenzy going on for any reasonably decent business with an SDE over $350k - never mind the $1M to $2M EBITDA businesses the HBR Guide recommends . You can put in all the LOI's you want within the timeframe you have in your mind, but getting it accepted by the seller is a whole other variable and it is totally out of your control. With PE coming in all cash on deals as low as $500k SDE in the most popular industries, good luck learning the game and getting a deal done within 6 months.
FYI - I've been learning and searching for about 14 months. Felt confident and versed enough to start putting in offers after about 5-6 months. Have put in about###-###-#### offers so far - 1 got accepted but the broker kept moving the goal post so the deal was at an overpriced valuation. I tried to renegotiate and the broker said no. Now I'm fully up to speed with sourcing, broker outreach, modeling the numbers quickly with limited information, and putting in 2-3 offers a week. Still no joy with getting a counter signed LOI, but it will happen soon if I just keep planning my work and working my plan.