Buying an already existing business is substantially less risky than starting your own from scratch. An established firm will have a place in the market, a loyal customer base, and public recognition. Not to mention, it’ll already be generating a profit.
If you’ve ever tried to buy a business before, however, you’ll know that it isn’t easy. Finding a profitable, well-run business for sale in any industry is like finding a needle in a haystack. Why? Because most mergers and acquisitions happen without the company ever going up for sale.
So, how do you buy a business that is not for sale? In this guide, we’ll discuss the many advantages of buying an off-market business, and how to go about it.
Can You Buy a Business That Isn’t for Sale?
In the UK, the vast majority of businesses are bought when the company is not openly listed for sale. This may sound like a contradiction, but it’s widely regarded as the best way to buy a business.
Sometimes, an interested party will approach the owner directly, and ask if they’ll consider selling. Alternatively, the owner will decide they want to sell, and find a buyer privately. This could be through word of mouth, or through a business acquisition specialist such as Chelsea Corporate.
Both parties agree on terms, and a deal is made without the company ever technically being for sale. This is known as buying and selling ‘off-market’.
What Does Off-Market Mean?
If a business is off the market, members of the public won’t know it’s for sale. It won’t be advertised through any official channels, or listed on marketplace websites. But that doesn’t mean that the owner isn’t considering selling. In fact, most company owners prefer to sell off-market.
Often, it comes down to cost. Selling a business on the market means the owner will have to pay hefty fees to a business broker. Selling a company privately, however, is free. It also means that their plans don’t become public knowledge, and they’ll only be approached by serious buyers.
What Are the Benefits of Buying Off-Market?
There are many great reasons to consider buying a business off-market. You’ll have more acquisition opportunities, and you’ll save time scouring advertisements. You also won’t have to face any competition, and will almost always get a better deal. Let’s dig a little deeper and find out how.
Most company owners prefer to sell privately. They’ll only list their business on the market as a last resort when a private buyer can’t be found. If you restrict yourself only to what’s advertised for sale, you’ll miss out. The best, most successful firms never get as far as the public market.
When you buy off market, business acquisition opportunities are endless – in every industry from software to construction companies. Go through a specialist off-market business broker and you can access a ‘hidden market’ of companies whose owners are open to selling.
Finding a good deal on the market is a time-consuming process. You could spend months filtering through endless advertisements for companies that aren’t a good fit for you. You’ll also waste time contacting businesses that are no longer available, but are mistakenly still listed for sale.
A much more efficient method would be to approach off-market businesses that appeal to you. A business broker specialising in off-market sales can do the research for you, and hand-pick opportunities that match your industry and budget.
Buying on the market means facing serious competition. Once you find a company you’re interested in, other interested prospective buyers may outbid you. The most reputable and profitable businesses are quickly snapped up.
This can be incredibly frustrating. Imagine being ready to close a deal, only to be gazumped at the last minute by a higher offer. Buying off-market means competition isn’t an issue, as the business is never advertised for sale.
Get a Better Deal
Finally, buying a business that isn’t officially for sale means you’ll get a better deal. On the market, prices are driven up by interest and competition. But also, business owners are forced to set higher prices, due to having to pay their broker fees and commissions.
Going off-market (privately, or through a buy-side business broker) means the owner doesn’t have to pay a penny to sell their company. They can therefore charge less – and you, as the buyer, will profit.
How to Find Off-Market Businesses for Sale
The problem with buying a business that isn’t for sale is, of course, that it isn’t advertised. There are countless marketplace-style websites that list businesses for sale to prospective buyers. But if you want to go off-market, these won’t be of any use.
So, as for how to buy a business that is not for sale, there are two main options:
- Contact business owners directly and ask them if they want to sell – you can find company information through Companies House
- Enlist the help of a specialist business broker who works off-market
There’s nothing wrong with approaching businesses directly and expressing your interest in purchasing the company. The problem is that this is an extremely time-consuming process and isn’t guaranteed to get results.
Hiring an off-market business acquisitions specialist, such as Chelsea Corporate, is by far the simpler choice. We have years of experience in finding quality off-market businesses and matching them with prospective buyers.
Contact Chelsea Corporate: Off-Market Acquisition Specialists
With Chelsea Corporate, buying an off-market business has never been easier. We are specialist business brokers with a particular focus in off-market mergers and acquisitions.
Our job is to find, vet and approach businesses for sale before they come onto the market. With Chelsea Corporate, you’ll have access to our exclusive database of profitable off-market businesses that can’t be found anywhere else. Every company in our database is subject to thorough due diligence checks, from accountancy firms to beauty salons.