So you want to buy a (profitable) small business and create a life of financial freedom. Sounds cool in theory, but much harder in practice. 

You’ve spent countless hours scouring the internet researching what the heck M&A is, but as for actually *doing* it (like talking to a lawyer, walking into a bank, sitting down with a business owner)…you’re stuck. 

I hear this a lot. You’re hyped about the potential of revving up your annual cash flow, but you don’t feel 100% confident about the crucial steps that are involved in securing a deal so you can make things happen. 

To be honest, it’s all about execution. 

If you can’t push past the key roadblocks that are holding you back, you’re going to keep being stuck with your single stream of income (or have a lot of headaches in the process).

Here are four of the most common things that are holding you back from buying a business through M&A:

1. You’re Struggling to Find the Right Deal

This can easily be the most daunting and overwhelming aspect of the business acquisition process. 

In fact, we hear it a lot from the UAers in our small biz buying course and in our mastermind…

Where do I find a profitable small business to buy?

How do I get my hands on the perfect deal?

The struggle is real, but it doesn’t have to be.

There are millions of boring businesses out there on the market that are patiently waiting for you to swoop in. You just need to know where they are hiding and how to find the right one. 

Here’s a list of the best places to find small business owners who are ready to sell:

• Local business listings
• Search Google, then stop in for a visit
• Find a local business broker
• Attend an industry conference or meetup
• Let your network know

One thing here? STOP overcomplicating everything! 

Finding a business can be as simple as doing some research, reaching out to the potential candidate, and stopping by the business to see if you’re a good fit.

If you’ve done some research, come up with three short bullet points of the kind of business you’re looking for. For example…

• Business owner age/reason for the sell
• A specific type of industry or business

2. You Don’t Know How to Build the Right Deal Team

There’s no doubt that putting together a dream team to help you navigate and execute an M&A deal can be a bit of an uphill battle, especially if you’ve never managed a team before. 

But the good news is that you probably already know at least a few people, or have a few leads, that can help you create this team without a lot of hassle. 

First place I’d look? Your existing network. 

There’s a good chance that you know someone who knows someone, and never underestimate the power of asking for an introduction. 

Here’s a list of the key players that you must have on your deal team before you purchase a small business:

• An attorney with M&A experience to help you draft, craft, and deliver the numerous legal docs involved in the negotiation process
• An accountant to scope out the numbers that the business owner has handed over to you and gut check if the deal is actually viable
• A banker or local SBA contact to support you during the financing stage of your deal

3. You don’t know how to write a letter of intent (LOI) 

You have found a business that completely aligns with what you’re looking for, and you want it. Everything is lining up perfectly.

The next stage is to craft the letter of intent (LOI), but you freeze. You put it off and procrastinate, thinking that the letter of intent is going to write itself—but you know this. It never does. 

The letter of intent is the first documented touchpoint between the parties who will be involved in your future deal.

Don’t send the LOI? Guarantee you won’t get the deal.

The letter of intent sets the stage for the terms of the agreement while also getting you the information you need to do your own due diligence and make an informed decision before you buy your biz. 

Here’s a list of what you need to include in your LOI, or you can check out our full list here:

• Pricing, financing, and the negotiation period
• Closing contingencies and confidentiality
• Timelines and termination date

4. You are Struggling to Get Financing in Place

It’s no secret…financing your deal is easily the most intimidating part of the deal-making process. 

There are a few financing options to choose from, but they may not all be the best fit for you. Here are a few ways to go about financing your M&A deal:

Option 1: Pay in Cash

Paying in cash upfront is hands down your riskiest option. You are responsible for providing high amounts of money straight outta your pocket.

If that money runs out or isn’t there for whatever reason, it’s on you. 

Option 2: Apply for a Loan

The traditional approach to financing your deal is heading on over to a bank and applying for a loan. A little old school if you ask me.

When you apply for a traditional bank loan, they will likely ask for some form of collateral. Think of things like your house, your car, or even money you have tied up in other places.

Financing through your bank is also risky because you’re locked in with high monthly payments that won’t be adjusted based on how your business performs. 

Have a slow month and less revenue? Sucks, but you’ll still owe the same amount that you do every single month (and eat away at your profit margins in the process). 

Option 3: Seller Financing

Without question your least risky option, and the best way to go about financing your deal. 

When you get involved with seller financing, the seller becomes the bank. That means you’ll pay them the down payment and the monthly payments, and most of the time, your payments are dependent on the profit amounts and performance of the business. 

The best part of this type of financing is that this loan is on your terms until the deal is paid off, giving you more negotiating power during the financing conversation. 

Ready to feel 100% confident when preparing to buy your first (or next) small business? We walk you through exactly what you need to do in our buying a small biz business course.

Yours Unconventionally,

Codie & Ryan

Co-founders – Unconventional Acquisitions