PART THREE

Finding the Right Small Business to Buy

You are now ready to begin your search in earnest. This part of the book takes you through the first two steps of the process: sourcing prospects and then filtering them to quickly eliminate the unattractive ones so that you have time to thoroughly study the few that might make good acquisition candidates.

We begin with chapter 7, “Managing Your Search Effectively: An Overview,” which focuses on how to apply filters to the prospects you source. We’ll describe how searchers find potential companies to buy using brokers in chapter 8, “Sourcing Prospects Using Brokers,” and directly contacting owners in chapter 9, “Sourcing Directly.”

Then the next two chapters help you further filter your prospects down to those with enduring profitability and committed sellers: In chapter 10, “Enduringly Profitable Small Businesses,” we explain the underlying traits of good small businesses with enduring profitability; in chapter 11, “Using Financial Information to Gauge Enduring Profitability,” we turn to the numbers and show you how to use financial information to do so quantitatively. Judging whether a seller is committed or not—the other key trait of attractive prospects—is covered in chapter 12, “Filtering for the Owner’s Commitment to Sell.”