How to Buy a Business: The Off-Market Way

Buying a business follows the same order every time: decide what you want, find it, talk to the owner, agree on a price, sign a letter of intent, line up the money, check everything, close and take over. Most of the outcome is decided at the second step. The business you find, and how many other buyers found it at the same moment, sets the price you pay and the terms you get.

This guide walks through the whole process in order. It spends the most time on sourcing, because that is where buyers who rely on listings lose ground, and where a buyer who writes to owners directly can build a pipeline nobody else has. The later steps get a practical summary each, with links to deeper guides where they exist.

Step 1: Decide what you are buying

Every acquisition starts with a buy box: the written criteria a business has to meet before you spend time on it. Without one, you evaluate everything that crosses your desk, and the deals that cross your desk are mostly the ones other buyers already passed on.

A usable buy box has four parts. Industry, specific enough that you can learn its economics in a few weeks (commercial HVAC service, not "home services"). Size, stated as a range of revenue or earnings. Geography, which matters more than people expect if you plan to run the business yourself. And the ownership situation you want, such as a founder near retirement with no family successor.

Write down what disqualifies a company as well. Customer concentration above a set level, heavy dependence on the owner's personal license or a capital-intensive model you cannot fund are all worth naming before you fall for a specific business. The tighter the box, the faster every later step goes, because your list gets shorter and your messages to owners get more specific.

Your buy box also has to fit your money. If you plan to use an SBA loan, the business generally needs enough steady cash flow to cover debt service with room to spare, which rules out many turnarounds. If you have committed equity behind you, the box can be larger and the structure more flexible. Settle this before you start sourcing, because owners will ask how you plan to pay.

Step 2: Sourcing, where the deal is really won

There are two ways to find a company to buy. You can wait for owners who have decided to sell and hired someone to market the business, or you can go to owners who fit your criteria before they decide. The first route is faster to start and easier to understand. The second takes longer and is real work, but it is the only one where you are often the only buyer in the conversation.

If you want a channel-by-channel comparison of marketplaces, brokers, networks, platforms and outreach, we cover that separately in our ranking of every way to find businesses to buy. This section focuses on the choice that matters most: listed deals versus going direct.

Why brokered and listed businesses are picked over

Brokers do valuable work. A broker-prepared business usually comes with organized financials and a committed seller, and for a first-time buyer that preparation can be the difference between closing and stalling. The problems with relying on listings are structural, and they hold even when the broker is excellent.

Adverse selection. A business on the market is a business its owner could not or did not sell another way. Some are excellent companies with an owner who simply ran out of time. Many have been shopped before. The Exit Planning Institute reports that only 20 to 30% of businesses that go to market actually sell , which tells you how many listings fail to meet any buyer's bar. When you browse listings you are fishing in the pool everyone else has already fished.

Auction pricing. A broker's job is to get the seller the best price and terms, and the main tool is competition. The IBBA and M&A Source Market Pulse survey for Q2 2026 found that deals over $2 million received an average of about five offers each, and 87% of deals over $5 million attracted at least three . BizBuySell's Q3 2026 data shows the same pattern from the price side: businesses that sold for more than $1 million closed at an average of 100.8% of asking price and 3.73 times cash flow, against 93.6% and 2.30 times for sales under $1 million . In the size range where institutional buyers and funded searchers operate, listed deals are priced by bidding.

Everyone sees it at the same time. A listing or a broker teaser goes to every buyer on the list in the same week. Your saved search on a marketplace is the same saved search hundreds of other buyers run. Speed helps a little, but the real effect is that you never get time alone with the owner to understand the business and build trust before price comes up.

Broker incentives point toward the seller and toward bigger deals. Brokers represent sellers and are paid on success, usually as a percentage of the price, so a larger deal earns more for the same hours. That is a reasonable business model, and it means a smaller buyer gets less attention and sees the best opportunities later. The Market Pulse survey also found that in deals under $5 million, half or more of buyers came from within 20 miles of the seller , which favors buyers who are already in the broker's local network. If you want to understand this side of the market better, read how business brokers get listings.

None of this means you should ignore brokers. Stay on the lists of the good ones in your niche, answer quickly and close what you say you will close. Just treat brokered flow as the second channel, and do the math on what each source actually costs you per real conversation. We break that comparison down in what deal flow really costs across brokers, cold email and the other channels, and if you are weighing paid platforms, see our review of Axial alternatives.

The owners who have not decided yet

The larger opportunity sits with owners who would sell to the right buyer but have done nothing about it. Retirement is the main reason owners sell: in the Q2 2026 Market Pulse it drove 62% to 72% of sales between $500,000 and $50 million. The same survey found that between 60% and 90% of sellers had done less than a year of exit planning, or none, before hiring an advisor . The Exit Planning Institute puts the share of the American business market owned by Baby Boomers at 51% .

Put those together and the picture is a large group of owners in their late fifties and sixties who will sell within a few years, most of whom have not planned it and none of whom are listed today. A buyer who reaches them first gets a private conversation instead of an auction. We cover how to approach that seller in detail in buying a business from a retiring owner, and the wider tactic of approaching companies with no sale process at all in how to buy a business that is not for sale.

How direct-to-owner outreach works, step by step

Direct outreach means building a list of every company that fits your buy box, finding the person who owns each one and writing to them. Email does most of the work because it scales and it lets an owner reply when it suits them. Letters and phone calls can support it. This is the method that funded searchers and independent sponsors use when they want proprietary deal flow, and our guide to how search funds find deals shows how searchers fit it around their two-year clock. Here is the process in order.

1. Turn the buy box into a target list. Start from every source that lists companies in your niche: state business registries, licensing boards, trade associations, map listings and commercial data providers. Filter by your size and geography criteria, then remove duplicates, closed businesses, franchises you cannot buy and subsidiaries of larger groups. For one tightly defined niche in a region, a real target universe often runs from a few hundred to a few thousand companies. If your list is in the tens of thousands, the buy box is too loose.

2. Find the real owner.The public email on a small company's website usually reaches an office manager. You want the founder or majority owner. Registry filings, licenses, the company's own about page and LinkedIn all help, and on larger targets you may need to confirm whether a holding company or a group of partners sits above the operating business. Getting this wrong wastes every later step, so check a sample by hand before you trust a data source.

3. Verify every email address. Large B2B databases cover corporate employees well and owner-operated companies poorly, so expect to combine sources and run every address through a verification tool before it goes into a campaign. High bounce rates damage the reputation of your sending domains, and once mailbox providers start filtering you, your emails land in spam where nobody reads them.

4. Send from separate domains, and warm them up. Never send cold email from the domain your company runs on. Register a few similar domains, set up a small number of inboxes on each and authenticate them. Google requires every sender to use SPF or DKIM and bulk senders to use SPF, DKIM and DMARC, and it tells senders to keep the spam rate shown in Postmaster Tools below 0.10% and never let it reach 0.30% . New inboxes need several weeks of gradual warm-up before they send at volume, and each inbox should send a modest number of emails a day. Every message also needs a valid postal address and a working way to opt out, and opt-outs have to be honored within 10 business days under the CAN-SPAM Act, which applies to business-to-business email too .

5. Write a first email an owner would answer.Keep it short, under about 100 words. Say who you are in plain language, why you are writing to this company in particular and what you want: a short call to see whether a sale might ever make sense. Name something specific about the business, such as how long it has operated or the market it serves. Leave out fund vocabulary like "platform" and "synergies," and never open with a valuation. An owner who spent thirty years building a company wants to know who you are and whether you would look after their people and their name.

6. Follow up, with something new each time.A large share of replies come from the second, third and fourth emails. Space them a few days apart over two or three weeks, and give each one a new reason to reply: what you would keep the same after a purchase, how you have handled the owner's role in other deals or a simple question about timing. Follow-ups that only say "bumping this up" add nothing and get ignored.

7. Treat "not now" as the start of a pipeline.Most owners who reply will say some version of "not yet," and that reply is worth keeping. Record the reason and the rough timing they give, then follow up when they told you to, usually somewhere between six and eighteen months out. Send a short note when something relevant happens in their industry. Owners remember the buyer who was polite and still around when their circumstances changed, and a lot of off-market deals close with someone who first said no a year earlier.

8. Qualify replies fast. When an owner says yes to a call, get it on the calendar within a day or two. Before you talk, check the basics you can see publicly so the first call can be spent on the owner and the business.

What reply volumes look like

Outreach done well produces a steady flow of owners willing to talk, and signed deals come later in much smaller numbers. Two of our clients, counted from their own reply trackers, give a sense of the range for a focused buy box:

"Interested" here means an owner who replied open to a conversation. Most of those conversations will not become a deal, and some will take a year or more to mature. What changes is the shape of your search: instead of competing for whatever is listed this month, you are choosing which of many owner conversations deserve your time. For a longer treatment of building that kind of flow, see our guide to proprietary deal flow.

You can run this yourself with off-the-shelf tools and a lot of hours, or hand the list building, infrastructure, copy and reply handling to a team that does it every day. If you want to see what it would look like against your buy box, you can book a call with us here.

Step 3: The first owner conversations

The first call is a chance for the owner to decide whether they like you. Ask about how they started the company, what they are proud of, what a normal week looks like for them now and what they want for their employees and their own next few years. Listen far more than you talk.

Hold off on price. If the owner asks what you would pay, explain how you value businesses in general terms and say you would need to see the financials before giving a number. Ask what timing would work for them, and whether anyone else (a spouse, a partner, a key employee) needs to be part of the decision.

If the conversation goes well, the next step is a mutual NDA and a request for three years of tax returns and financial statements. A business with no sale process will not have a CIM ready, so you will be building your own picture from raw documents. Our explainer on what a CIM is shows what a prepared seller would normally hand over, which doubles as a checklist of what to ask for.

Step 4: Valuation basics

Small businesses are usually priced as a multiple of earnings. Below about $2 million in price the earnings figure is normally seller's discretionary earnings (SDE), which adds the owner's salary and personal expenses back to profit. Above that, buyers use EBITDA, with a market-rate salary for whoever will run the business.

Multiples rise with size. In the Q2 2026 Market Pulse survey, median multiples were 2.0 times SDE for deals under $500,000, 2.8 times for $500,000 to $1 million and 3.1 times for $1 million to $2 million, then 4.0 times EBITDA for $2 million to $5 million and 5.8 times for $5 million to $50 million . These are medians across industries, so treat them as a starting point. Recurring revenue, customer concentration, how dependent the business is on the owner and the quality of the books all move the number.

The earnings figure is usually harder to pin down than the multiple. Owner-run companies mix personal and business spending, and add-backs are where sellers and buyers disagree most. Rebuild the earnings yourself from tax returns and bank statements, and only accept add-backs you can document. Our guide to business valuation multiples goes deeper on ranges by industry and what drives them.

Step 5: The letter of intent

A letter of intent (LOI) sets out the price, the structure and the main terms before both sides spend money on lawyers and diligence. It is mostly non-binding, except for clauses like exclusivity and confidentiality. Expect it to cover the purchase price and how it is paid (cash at close, seller note, earnout or rollover equity), whether you are buying assets or shares, the working capital you expect to be left in the business, the owner's role after closing and a period of exclusivity while you complete diligence.

In an off-market deal, the LOI is also where trust gets tested. The owner has not been coached through a process, so explain every term in plain language, and say clearly which parts are firm and which depend on diligence. Retrading the price later without a clear reason found in diligence is the fastest way to lose a seller who chose you over a broker.

Step 6: Financing the purchase

Most acquisitions are paid for with some mix of senior debt, the buyer's equity and money the seller agrees to receive later. In the Q2 2026 Market Pulse survey, sellers received 83% to 92% of the price at closing on average, and seller financing made up less than 10% of most deals . Off-market deals with retiring owners can carry more seller financing than that, because the owner cares about the business continuing and is often open to being paid over time.

SBA 7(a) loans

For many individual buyers and searchers, the SBA 7(a) program is the main source of acquisition debt. The rules changed twice recently. SOP 50 10 8 took effect on June 1, 2025 , and SOP 50 10 8.1, which moves the change-of-ownership rules into a new Appendix 15, applies to applications received by SBA on or after October 1, 2026 .

As of November 2026, the key points for a buyer acquiring a whole company are these. The minimum equity injection is 10% of total project cost, and for a buyer who is not already an owner it cannot be reduced. A seller note can count toward that injection only if it is on full standby, meaning no principal or interest payments for the entire term of the 7(a) loan, and seller debt and other limited sources together can cover no more than half of the required injection. So on a 10% injection, a standby seller note can supply at most 5% of project cost, and the rest has to come from the buyer .

Under 8.1, seller earnouts are not allowed in an SBA-financed acquisition, and the seller can generally stay on only as a consultant, for up to 24 months in total (SOP 50 10 8 allowed 12) . These rules shape the whole deal, so raise them with the owner early. SBA rules change often and the details depend on the deal, so confirm the current requirements with your SBA lender and attorney before you put terms in an LOI.

Seller financing

Outside SBA deals, a seller note is one of the most useful tools in an off-market purchase. It can close a gap between your price and the owner's expectations, and it shows the owner believes the business will keep performing after they leave. Terms are negotiable: interest rate, length, whether payments start right away, and what happens if the business underperforms. Our guide to seller financing covers how to structure one and how to raise it with an owner. The tax treatment for the seller can be significant, so both sides should run the structure past their own CPA.

Equity

The rest of the money is equity: your own savings, investors who back you deal by deal, a committed search fund or a private equity fund. More equity means less debt pressure in the first years, which matters if the business is cyclical. Investors will want to see the same diligence you do, so build your model and your diligence plan with their questions in mind from the start.

Step 7: Due diligence

Diligence is where you confirm that the business you agreed to buy is the business that exists. The main areas are financial (do the earnings hold up when rebuilt from bank statements and tax returns), legal (contracts, leases, licenses, litigation and how customer contracts handle a change of ownership), operational (key employees, systems, suppliers and equipment) and commercial (customer concentration, churn and pricing power).

On larger deals, a quality of earnings report from an outside accounting firm is standard, and under SOP 50 10 8.1 an SBA lender requires one on initial acquisitions of $3 million or more . Budget for legal and accounting fees early, since they are spent whether or not the deal closes.

Expect the whole process to take months. The Market Pulse survey found Main Street deals averaged six to 10 months from engagement to close in Q2 2026, and lower middle market deals about a year . Off-market deals add the time it takes to find the owner and build the relationship before any of that starts.

Step 8: Closing and the transition

Closing is a day of signatures and wires, set up by weeks of work between your lawyer, the seller's lawyer and the lender. The purchase agreement replaces the LOI, and it adds the representations and warranties, the indemnities, the final working capital adjustment and the transition terms.

The transition decides whether the deal works. Agree in writing how long the owner will stay, what they will do and how introductions to key customers and employees will happen. Meet the staff early and tell them plainly what will and will not change. In the first few months, change as little as you can while you learn how the business really runs. The owner who chose to sell to you, instead of to a stranger at an auction, will usually want the handover to go well, and that goodwill is one of the quiet advantages of buying off-market.

Frequently asked questions

How long does it take to buy a business?

Once a deal is identified, Main Street deals in the Q2 2026 Market Pulse survey took six to 10 months from engagement to close, and larger deals about a year. Finding the right deal takes longer. Stanford's 2026 Search Fund Study found that searchers typically take around 20 months to acquire a company . Off-market outreach usually produces first owner conversations within weeks of sending, while the deals themselves mature over 6-18 months.

Is it better to buy through a broker or off-market?

Most serious buyers do both. Brokered deals are prepared and move faster once you are in, but you compete on price with other buyers. Off-market deals take longer to find and require you to do the preparation yourself, and in return you usually face little or no competition and can shape the structure with the owner. If you only have time for one, choose based on your edge: buyers with a large check and speed do well with brokers, and buyers with a clear niche and patience do well going direct.

How much money do I need to buy a business?

It depends on the price and how you finance it. With an SBA 7(a) loan, expect to bring at least 10% of total project cost as equity, of which no more than half can come from a seller note on full standby under current rules. Add legal, accounting and diligence costs, and some working capital after closing. Confirm the exact amount with your lender before you make an offer.

Will owners really reply to a cold email about selling?

Yes, if the email is short, specific and from a real person, and if the list and sending setup are done properly. Spur Ridge Capital recorded 184 interested owner replies in 85 days and Rockland Heritage 125 in 86 days, both from their own reply trackers. Most replies will be "not now," which is the start of a pipeline, so plan to follow up with those owners for a year or more.

What is the most common mistake first-time buyers make?

Starting without a tight buy box and then relying only on listings. That combination means evaluating a lot of businesses other buyers passed on, at prices set by competition. The second most common is trusting the seller's earnings figure without rebuilding it from tax returns and bank statements.

Related guides: the biggest mergers and acquisitions of all time, ranked by deal value; the top private equity firms, from mega-funds to the lower middle market; and how to choose a deal origination platform.