Author: Chris C September 24, 2015 0 Comments

Private party business acquisitions can take the form of a couple situations including a partner buy-in/buy-out and sale of the business to an outside party.  These opportunities can be sourced by finding:

1. A business owner who is interested in selling to a partner.
2. A business owner who is interested in buying out their partner.
3. A business owner who wants to sell their company.
4. An entrepreneur who wants to purchase an existing company.

If you work for a bank that offers SBA financing, there is a good chance that you offer the SBA 7a program.  This program is beneficial for several reasons but the specific use we will focus on today is for acquisition of a business.

Next step, find some leads!

The website BizBuySell.com is an online marketplace for businesses. Think Loopnet but instead of listings for real estate, it features listings for companies that are currently for sale in your market.

The website features filtered searches so you can easily narrow down to your target market and include/exclude specific industries.  If your bank doesn’t like hotel loans, you can exclude them.  If you only want to focus on medical or manufacturing, you can do that too!

I set up my own login at BizBuySell and I have my filtered searches saved so I can easily bring up new listings when I want to source deals.  You can also use this to have listings emailed to you if they fit your criteria.

Once you have some leads, it’s time to make some calls.

The contact information you will find on the listings is typically a business broker.  A business broker or business intermediary is a professional who has the training and experience to help facilitate the sale of a business.

Contact the business broker and let them know what listing you saw.  Express your interest in financing the deal.  You can often times issue a prequalification letter or a term sheet which they can include in the marketing package for the business.  What you are doing here is qualifying that the business will support the debt for the SBA 7a business acquisition loan.  This is only half the battle as the broker will now need to find a qualified borrower to purchase the company.  The benefit is that there is now a term sheet in the package that includes YOUR bank’s letterhead, YOUR name, and YOUR terms.

So now you’ve identified some deals and issued some term sheets.  You have planted the seeds that could grow into loans.  The most important thing to do from this point forward is continue to follow up!

It is wise to stay in regular contact with good business brokers.  The best ones have lenders calling on them constantly.  These will also be the toughest brokers to track down or get in front of.  If you can’t reach them via phone, I’ve found that an email with the company description and sale price in the subject line will often grab their attention.

And don’t just focus on the listings…ask the broker what else they have going on.  They might be in the middle of a deal where another lender fell through, is taking too long, etc.  This is your opportunity to step in, save the day, and build a reputation that will lead to more deals!

So get on BizBuySell and start sourcing those SBA 7a loans!