My business partner and I have talked about owning our own business for years but we didn't start seriously searching for a business to buy until one year ago. We looked at a TON of deals, made several offers by LOI, before finally finding and closing on a business we really love. I had no experience prior to this and I am now an owner/operator for a flooring company! We closed less than a month ago but I want to post a few take aways.

We used an SBA loan to purchase the business and we went with a major SBA lender. Overall I think the process of using a major SBA lender was to our benefit. One thing about using the bank we used was that I really felt like they would not allow me to make a huge mistake and buy a business that wasn't a good deal. This isn't talked about enough but the bank has a vested interest in your success because they want to be paid back (but don't completely trust them because individuals at the bank also get paid for closing deals so they have their own incentives). Several times the bank told me to not accept certain terms or demands from sellers that I wouldn't have even known to object to. The bank also does an independent third party valuation of the business and you can compare that to your own valuation.

Things I'm glad I did:

-I'm glad I bought a local business that isn't far from my home.

-I'm glad I bought a business from a Seller I trust. I almost bought a different company and I had reservations about the seller. I'm so glad he backed out of the deal because I think he wouldn't have helped with the transition. The post-closing transition is so important and having someone who wants the business to succeed is invaluable!

Very specific to my deal, I had a salesman with extensive experience in the industry so it's been extremely helpful to hire him immediately and have him here for the transition so that sales revenue is seamless during the change of ownership.

Things I would do differently:

-I should have hired a local lawyer that I could meet with in person. We found our lawyer through a searcher podcast advertisement for an M&A law firm. My lawyer was in a different state and while I was still able to close the deal, it would have been a lot easier with someone I could talk to in person. I just work better that way. Also something I learned was that there is kind of a gap between small deals <$1MM and medium sized deals >$5MM that is difficult to find the right lawyer for. They either do bigger deals and charge a lot or they do tiny deals. I actually talked to quite a few law firms and found that my deal was in the middle where I couldn't pay for the full M&A corporate deal package or they law firm didn't want to take on my deal because it was bigger than the tiny deals they usually did. My lawyer ended up coming up with a new pricing package for me that wasn't something they normally would do.

-I would recognize that the buyer often has a huge advantage over the seller (at least for the deals we looked at). I know they say "don't buy a job" but I wanted to be an owner/operator. So the advantage I had was that the businesses I was looking at weren't "turn key" with a manager in place. So for example, if I am looking at a flooring company that is owner/operated, then I'm only competing with a small number of Searchers who not only want to buy a business that requires them to work as the owner, they also must want to work in that particular industry. So the seller needs to find a buyer who is either self-funded or pre-approved for financing the asking price, someone who is local and can actually run the business, AND someone who wants to run a business in that particular industry. This limits the pool of potential buyers to a small number even in a big city. So if you do meet all those requirements then you have a bargaining advantage.

-I wish I would have started the transition earlier than I did. There's a lot you can do before the official closing than I originally realized. Particularly I wish I would have started opening accounts and talking to vendors while we were still closing. I've opened a ton of different accounts since closing: Stripe to accept CC payments, QuickBooks, a local bank for Business Checking (in addition to the business checking account I am required to have with the bank I borrowed from), new CRM/software to streamline the business, new payroll software, business credit card (start shopping for what rewards you want), start closing Seller vendor accounts and opening new vendor accounts ASAP for all your suppliers (this is harder than it sounds for my particular industry), create a plan for transitioning all social media accounts and website, establishing marketing through Google Ads/Yelp/Angie's List/etc etc., switch ownership of Facebook, LinkedIn, Nextdoor, Instagram, Twitter, website hosting etc., if you need to hire someone you need to establish your Indeed/LinkedIn accounts, switching over vehicle registration and title and toll tags. You can also start researching different business insurance plans. The list of things you are going to be doing after closing is endless but some of these things I could have done prior to closing. It's been frustrating because a lot of the accounts take several days to establish, they also often times require you to send them closing documents, corporate formation documents, bank account information, credit checks, etc. It's a lot.

-I was disappointed with most of the Seller's Brokers I worked with. My biggest complaint is that the brokers are not managing expectations for sellers about the entire process, especially the process when the buyer is using an SBA Loan. Every bank will brag about how they can close an SBA loan in six weeks or whatever but I just don't consider that realistic at all for most people. I've had tons of background checks and I've bought a bunch of rental properties so I thought the loan process would go smooth but there are all kinds of things that can happen that will slow the process. For example, I had a VA hospital bill from three years ago that I had no idea about. The VA put a flag on me that didn't allow me to borrow an SBA loan until it was paid. I didn't even know about this until the bank applied for an SBA loan number. I was able to pay the very tiny amount ($137) I owed but the bank wanted to see my original bill which I didn't have and had to request from the Treasury Department!, which had to be physically mailed to me. These are the kind of delays that can happen. So don't expect the closing to happen quickly just because you have a signed LOI.



Overall, I'm very happy with the company I bought and I'm incredibly excited to grow it. I can answer questions about the process if you have any.

Patrick