In addition to buying into someone else’s business model (franchising) or founding your own company based on your own business idea (starting from scratch), purchasing an existing company is another proven form of self-employment. This often involves business succession planning, where no buyer can be found among family members, employees, or business partners.

Over the years, a substantial market for business sales has developed, primarily targeting individuals or teams, typically between the ages of 40 and 55, as potential buyers. This market is truly a buyer's market: for every interested buyer, there are between 5 and 10 potential sellers.

However, finding the right company is rarely a stroke of luck.

Internal Equity:
Internal equity refers to using your own capital or the capital already available within your business to finance a business acquisition. This could come from personal savings, retained earnings, or liquidating assets. Internal equity is typically used when the acquisition is of a smaller scale, where the buyer has sufficient liquidity or reserves to fund the purchase without external financing.

Utilizing internal equity can be advantageous because it allows you to avoid taking on debt or giving up ownership stakes to outside investors. However, this approach is more viable when the business being acquired has a relatively lower price, or when you have strong liquidity and financial health. It’s ideal for entrepreneurs who want to maintain full control and ownership without external influence.

External Equity (or Private Equity):
For larger acquisitions, raising external capital from investors is often necessary. In this scenario, investors contribute funds in exchange for equity in the acquired business or in your existing business. This is common when the acquisition cost exceeds your available capital, or when the business requires significant additional investment for growth. While this brings in valuable resources, it also means you share ownership and, possibly, decision-making power with your investors.

Debt Financing:
In most cases, businesses use a combination of equity and debt. Typically, you can leverage your equity by a factor of 2-3x through loans. For instance, if you have $1 million in internal equity, you could potentially secure $2-3 million in debt financing. This enables larger acquisitions without diluting your ownership, but it also comes with the responsibility of repaying the debt with interest. Debt financing is common when the business being acquired generates sufficient cash flow to service the loan.

The business acquisition market is highly volatile, with the available offerings changing frequently. It is part of our job to constantly monitor the market and inform you of new opportunities that match your search criteria.