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Buying your business for MSPs. Chapter 5, Finding. Part A.

The key to getting a good deal is being exposed to lots of deals from the right place. By ensuring you have a deal pipeline in place, you’re not just dependent on those occasional deals that land at your feet, for which you’d likely be too grateful for and too attached to. Often, the best business is no business at all, and being able to walk away is very powerful in terms of your positioning and negotiation.

To generate deal flow, there must be activity on your part, at least until people start bringing opportunities to you. Here are a few ways to source businesses to acquire. Although there are as many ways to source them as there are businesses themselves, so don’t be too rigid in your thinking. Remember, any business person you could meet could potentially sell you their business if the conditions were favourable and they were asked in the 1st place.

Business brokers. Generally speaking, by the time a business is listed with a business broker, the asking price will be at a premium and getting a bargain will be much harder due to competition. The broker has already sold the dream to the vendor, and they will have been primed to expect a life-changing cash sum. As always, there are exceptions to the rule, and you can work with brokers to your advantage. Notwithstanding this, if there’s a business that is highly important to you because of its strategic value, then you may simply want to pay full market value and get one off the shelf without the hassle of sourcing one for yourself. Brokers have a constant stream of businesses to sell, and they can keep you in the loop. They have the advantage they are already working with multiple vendors. They can give you lots of information ready to go, plus they are financially motivated themselves to sell the business. However, never forget that they are always acting in the interests of themselves and or the vendor. They can often give a false impression of the value of the business and also the amount of interest that it’s receiving. If possible, ensure that any brokers you are working with are accredited with bodies such as the International Business Brokers Association, IBBA, or NEAA commercial. Members of such bodies are subject to a code of conduct and membership indicates they have the necessary professional skills, knowledge and experience.

These are the various websites that list businesses for sale. As a bare minimum, check out businessesforsale.com, bizbuysell.com, daltonsbusiness.com, writebiz.co.uk, gumtree.com forward slash business for sale. When you register for these sites you get alerts when prospects that match your criteria are added and at the very least you can start to get an industry feel for what some businesses are asking for and you can scrutinise their numbers in terms of profits and turnover. Interestingly, the majority of businesses sold are not through brokers at all.

They are sold privately. Private sales, acquiring businesses that are not listed for sale anywhere. Ideally, you’ll be working with a motivated seller because you want to acquire your target business for as little as possible. If you can acquire a business at a discount, you’re already ahead of the game and less financially exposed. If the motivated seller hasn’t listed their business with any of the brokers or broker websites, there should be less competition, ideally none, and hopefully you’ll get a better deal. Below are a few of the main reasons a business owner may be motivated to sell. other than simply cashing out a profitable business or selling because the offer is too good to refuse. Retirement, cash problems, tax issues, out of control personal finances or litigation. Health issues, poor performance and declining revenues. Boredom, tired owner, burnout. A life-changing event like relocation, family issues, divorce, etc. New horizons, partner disputes, and industry changes, new legislation or industry downturn. From this shortlist, we can see some motivational causes have less impact on the value of business than others. Someone telling us that they’re looking for a new challenge may sound plausible, but we need to ensure they’re not trying to cover up a more sinister reason that they’re keen to sell. Much like buying a second-hand car, it’s a case of caveat emptor. More about this later in the section about due diligence.

So, where do you find these business owners that are motivated to sell their business? The simple answer is anywhere and everywhere. Whilst we shortly examine some simple strategies to methodically search for these motivated sellers, the fact is that you should always be open-minded and available to a potential deal in any situation where you’re interacting with other people, even if they’re not the business owner themselves. Of course, you’ll most likely be in a traditional business environment, such as a meeting with clients, but don’t forget that all business owners have private lives too, and so you could easily hear or see signs of an opportunity whilst you’re playing golf or at a wedding, pretty much anywhere else. Always be alert to signals heralding opportunity. You may not directly hear someone exclaim out loud that they’re desperate to sell their business, but you may well overhear them saying they need to start caring for a family member or move location or they have health issues. Put two and two together and voila, you may just have a lead.

Clearly, discretion is called for. Given what you already know about direct response marketing, you should now be in a position to devise a basic strategy for both inbound and or outbound marketing, ideally both. For starters, we can consider channels such as offline ads, trade publications, journals, portal sites, Online ads such as search ads, Google, Bing, Facebook ads, site sponsored ads, YouTube ads, etc. Social media, both ads and engagement on Facebook, LinkedIn, Reddit. Social groups, Facebook, LinkedIn, meetups, specialist blogs and sites. Word of mouth, customers, suppliers, business owners, competitors or brokers. Trade shows, sponsored events, business networking. Business buyers, clubs and associations and mailing lists. There will be many more, although now you have plenty to be getting on with.

MSP Marketing in bite-sized bits. It’s easier than you think with MKLINK. To get more of MKLINK’s MSP MBA Marketing and IT training resources, make sure that you’ve registered for your account for free now at www..mklink.org.