How to Buy a Business

Learn how to find a business to buy, evaluate its numbers, and submit a non-binding letter of intent, with seller financing and due diligence, plus essential EBITDA concepts.

Discover how to afford buying a business through bank loans and seller financing. Visualize a $1 million purchase requiring just 25% down, aided by a 20% vendor take-back.

Define your target before searching, assess your past experience, skills, and industries, stay agnostic to opportunities, and start wide then narrow in for the right business.

Connect with business brokers, explore listings, and build credibility to close deals by researching industries, knowing your ebitda targets, and acceptable multiples.

Identify acquisition targets through accounting firms, law firms, banks, and online platforms like Village Wealth. Leverage cold outreach to owners and compare broker fees, education, and price to maximize value.

Build your deal team early by interviewing accountants, a lawyer, and a banker to handle financial due diligence and financing. Optional investors can help with larger acquisitions.

Define your target industries, skills, and business type, keep an open mind, and start wide before narrowing; build a deal team and connect with brokers, banks, owners, and online platforms.

Assess a business by age, barriers to entry, and a capable team, targeting at least a 15% ebitda to revenue ratio, as illustrated by a Calgary artificial turf firm.

Learn how to access the confidential information memorandum, sign an NDA, and assess team tenure, customer concentration, contracts, supplier relationships, and financials to prepare a non-binding LOI.

Learn to read the income statement, calculate EBITDA, and add back non-cash items like depreciation and amortization, applying adjustments to normalize earnings for a future business purchase.

Explore the balance sheet, a snapshot of a company’s financial position that lists assets, liabilities, and equity, and learn how liquidity, solvency, and year-end timing inform investment decisions.

Understand the letter of intent as a non-binding engagement showing intent to proceed, compare asset and share sales, and cover escrow, contingencies, exclusivity, and closing timelines.

Explore analysis in buying a business, covering first glance analysis, EBITDA to revenue ratio, barriers to entry, SIM and NDA, team, customer concentration, income statement, balance sheet, and LOI components.

Dive into the due diligence process after exclusivity, as the deal team uncovers skeletons in the closet and thoroughly reviews the business to determine if this is the right purchase.

Contact multiple banks early to secure financing, compare terms, and consider a financial broker, while coordinating with your accountant and lawyer to assemble financials and draft the share purchase agreement.

The share purchase agreement acts as the brain of the deal, clarifying terms and mitigating risk with representations and warranties throughout due diligence and negotiation with your lawyer.

Perform legal, financial, operational, and commercial due diligence to uncover risks and validate value, leveraging your deal team and market insights for growth and financing.

Learn due diligence process after loi acceptance, assemble your deal team, draft the share purchase agreement, and conduct legal, financial, operational, environmental, human resources, and tax diligence to mitigate risk.

Approach owner transition with humility and a clear plan, including phased handover—three months full-time, then three months part-time, followed by 18 months of consulting—while engaging employees and stakeholders.

Navigate the greatest wealth transfer by learning to find, evaluate, and acquire businesses through a letter of intent and due diligence, with a deal team guiding the transition.