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Buying a business

A First-Time Buyer’s Guide to Purchasing a Business

Your roadmap to understanding how a business purchase actually works, from the first look to the day you take the keys.

Buyers9 min readShane Degen, M&A Advisory & Valuations

Introduction: Why Buying is Often Better Than Building

Starting a business from scratch is incredibly risky (15% success rate). You have to find customers, build systems, and pray that your idea actually makes money. Buying an existing business is a completely different game.

When you buy a business, you are buying a machine that is already working. You are buying an existing paycheck, proven customers, and systems that are already in place. It can feel intimidating, especially if you have never done it before or if you do not have a massive bank account. But you do not need to be wealthy to buy a business; you just need to be prepared, realistic, and willing to learn the process.

This guide is your roadmap to understanding how a business purchase actually works, from the first look to the day you take the keys.

Your Complete Buying Roadmap

  1. 1Buyer Prep — set budget, skills, commitment
  2. 2Sign NDA
  3. 3Receive and review CIM
  4. 4Meet Owner — discuss business and vision
  5. 5Submit LOI — outline terms and intent
  6. 6Due Diligence — investigate finances and ops
  7. 7Sale Agreement
  8. 8Settlement
  9. 9Handover

This roadmap outlines every stage of the business buying journey — from your initial preparation through to the moment you take ownership. Each step builds on the last, ensuring you move forward with confidence and clarity.

Part 1: Getting Yourself Ready (The Buyer’s Homework)

Before we start looking at businesses, we need to make sure you are looking for the right kind of opportunity and that your finances are organized.

Determine Your True Budget
You rarely need 100% of the purchase price in cash. Many business purchases involve a mix of your savings, bank loans, and "seller financing" (where the current owner lets you pay off a portion of the price over time from the business’s profits). Knowing exactly how much cash you have available to put down is the first step.
Identify Your Skills
A good business can become a bad investment if it does not match your skills. If you are great at sales but terrible at managing people, we need to look for a business that fits your strengths. Be honest about what you are good at and what you hate doing.
Understand the Commitment
Buying a business is not a passive investment. Especially in the beginning, you will need to be hands-on to learn the ropes, build trust with the staff, and understand the customers.

Part 2: The Path to Ownership (How We Work Together)

Once you are ready, it is my job as a broker (especially if I am acting as a buy side broker) to help you navigate the market, understand the businesses you are looking at, and guide you safely through the transaction.

1
The Search & The Secret (The NDA)
When you see a business advertised, you will notice the name and location are hidden. Owners are terrified of their staff or competitors finding out they are selling. To see the details, you must sign a Non-Disclosure Agreement (NDA). This is simply a legal promise that you will keep the business’s information completely confidential and not approach the owner independently without permission.
2
Reviewing the Brochure (The CIM)
Once the NDA is signed and you are qualified, I will give you a Confidential Information Memorandum (CIM). Think of this as the ultimate sales brochure. It will explain the history of the business, what it sells, who its customers are, and exactly how much money it makes.
3
Meeting the Owner
If you like what you read in the CIM, the next step is a buyer-seller meeting. This is a casual conversation, often held after hours. It is your chance to ask the owner why they are selling, how the daily operations work, and to see if you actually like the business environment.
4
Making an Offer (The LOI)
If you want to buy the business, we first come to a basic verbal agreement and then we will draft a Letter of Intent (LOI/HOA). This is a simple document outlining your offer: how much you want to pay, how you plan to finance it, and the terms of the deal. It is not a final, binding contract yet; it is a proposal where you and the seller agree on the big picture. This is typically submitted with a 10% Deposit.
5
Kicking the Tires (Due Diligence)
Once the seller accepts your LOI, you enter Due Diligence. This is your investigation period. You (and your accountant) will get to look "under the hood" to verify that the profits are real, the equipment works, and the lease is secure. If you find a major hidden problem, you can usually renegotiate or walk away.
6
Making it Legal (The Sale Agreement)
After you are satisfied with your investigation, the lawyers take over. They will write up the final, legally binding Business Sale Agreement. This contract protects you, outlines exactly what assets you are buying, and ensures you do not inherit the old owner’s debts (only relevant in a share sale).
7
Settlement & Handover (Taking the Keys)
On settlement day, the money is transferred, and you officially own the business. But the old owner doesn’t just disappear. They will typically stay on for two to four weeks to train you, introduce you to the landlord and suppliers, and make sure you are comfortable running the show before they leave. Afterwards they are typically available for consultation for 3-12 months.

Conclusion: Your Next Step Starts Here

Buying a business is one of the most powerful financial decisions you can make. Unlike starting from scratch, you are stepping into something that already works - with real customers, real revenue, and real systems already in place. The process may seem complex at first, but as this guide has shown, every step is manageable when you know what to expect and have the right guidance alongside you.

Whether you are still figuring out your budget, identifying your strengths, or ready to sign your first NDA - the most important thing is to take that first step. You do not need to have all the answers right now.

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