Most people who want to buy a business never succeed. And not for the reasons you might think.
It’s not money. It’s not a shortage of good businesses. For some, it might be not putting in the required effort. But even those who are qualified and dedicated to the acquisition journey often fall short.
What stops them is the lack of confidence.
I look at confidence in acquisitions from two perspectives.
The first is deal confidence. Do I have the skills required to navigate the acquisition process and correctly determine if a deal is right for me?
The second is ownership confidence. Do I have the skills required to successfully run, grow, and lead the business I want to buy?
Deal confidence takes time and takes reps. Few people start the acquisition process feeling highly confident in their ability to make good decisions. On average, it takes looking at about a thousand deals to close your first. Part of that reason is there’s a huge learning curve that is built over time by putting in reps, and digging deep into deals. Each deal you look at, you learn from. Your confidence grows. It gets easier. But it’s uncomfortable in the beginning because it requires you to move forward with a high amount of uncertainty.
You’re more ready to own than you think
Ownership confidence is something most qualified buyers should have on day 1, but often don’t have because they aren’t looking at their future business in the right way.
I bought a laundromat without spending a day in the laundry business. My wife didn’t even like me doing laundry at home.
I didn’t really care that what I bought was a laundromat. I ran a marketing agency for over 10 years with the first few focused solely on marketing for local businesses. I wanted to buy a business in an industry where marketing was weak and that didn’t require my full-time effort.
I stumbled upon a laundromat that looked interesting. Solid profits. No advertising. No website. No Google listing.
And the more I explored laundromats, the more I saw that wasn’t an isolated case. It was systemic to the industry. That was the industry-wide signal I was looking for.
I wasn’t confident in my knowledge of laundromats. But I was confident that the marketing gap was real and that I knew how to fix it.
Most people look at a solid business in an unfamiliar industry and immediately dismiss it. That’s usually the wrong move.
Sure, there are some industries where having direct experience is critical. But in most, the experience required to manage the business day-to-day doesn’t have to come from you. It needs to be there, but it can come from others like existing employees or operators you trust.
Instead, I like to think about how a buyer can come into a successful business, fix whatever is broken (and even most successful businesses have something broken), and get an immediate bump in profit and cash flow.
Maybe you have marketing experience. Or maybe it’s sales, customer service, operations, process development, team building, strategy. Whatever superpower you bring into acquisitions, first and foremost find a business to buy where that will lift an already profitable company.
I worked with a buyer named David, thirteen years in corporate sales management. Despite having no manufacturing experience, he bought a manufacturing company. The production side of the business was managed by a long-time employee who wasn’t going anywhere. What the company lacked was a well-run sales team.
The outgoing owner was a good salesperson, but not a great sales leader. He was driving sales because “nobody else could do it.” Fortunately, he had others on the team to handle the ongoing customer relationships. Without that, the owner dependence might have been high enough to make the business unsustainable after he left.
David came in, relied on the key employee to keep production going, and spent the first six months focused on building out a world-class sales team. Profit grew by 18%, well above the 6% average growth over the prior three years.
I see this time and time again. The buyers most ready to be owners are the ones most convinced they aren’t. They convince themselves they can’t take over a specific business because of what they lack, versus tapping into the strengths that made them the successful person they are in the first place.
Where ready buyers freeze
I worked with an engineer a while back. Jennifer. Brilliant, deeply experienced, great with people. She also had a habit of overthinking, and that’s what got her.
She found a deal that fit her buy box perfectly. Around $3 million. Right industry, right size, right location, right financials. She knew it was a good fit, and so did I.
She did everything correctly at the start. Found the listing, called the broker, signed the NDA, got the CIM. We went through it together and it looked good.
Then she slowed way down.
She wanted to know more before she’d submit the LOI. How involved was the owner? Were the key employees going to stay on? A few line items in the financials nagged at her. All fair questions. But every one of them gets answered in due diligence, which happens after the offer, not before it. I told her to put in the LOI based on what she knew. It’s non-binding. It’s how you earn the right to ask those exact questions.
But she wanted answers first.
She was ready to own. That part was never in question. What she didn’t have was confidence in the deal itself, and she was trying to build it from the wrong side of the offer.
You never get all the answers up front
Here’s what Jennifer misunderstood, just like most buyers. The information you need to feel fully confident in a deal isn’t available to you when you’re writing an offer. It comes in later after you’ve earned the right to see it.
Let’s walk through a typical Main Street deal process.
It starts with the listing. Public, anonymous, a few lines of description and a rough financial picture. Enough to decide whether it’s worth a closer look. That’s it.
You sign an NDA and get the CIM. Now you see more. A basic one gives you the business name, the location, real financials with the add-backs laid out. A good one goes further: company history, an org chart, a customer breakdown with any concentration risk, monthly financials going back a few years. But that’s usually all you get before you have to make an offer. Maybe a short call with the owner or broker on top of it. That’s what everyone is working with.
It’s like buying a house. You make an offer, it gets accepted, and you still don’t know everything about the place. That’s what the inspection contingency is for. You assume what you’ve been told is true, you make your offer contingent on verifying it, and if the inspection turns up something, you renegotiate or walk. A business deal works the same way. The LOI is non-binding. It gives you the right to dig in.
Once your offer is accepted, everything is fair game. Bank statements, tax returns, payroll, invoices, sales data, the lease. You might be able to sit down with key employees. You can ask for just about anything the business has. That doesn’t mean you’ll get all of it, and that’s useful too. If a seller won’t hand something over, that tells you something. A delay in diligence is its own kind of answer.
So all those questions Jennifer wanted answered before she’d make an offer, how involved the owner was, whether the employees would stay, the line items that nagged at her, those were diligence questions. The offer is what unlocks the answers. The confidence she was waiting for was sitting on the other side of the move she wouldn’t make - the LOI.
Why qualified buyers don’t close
Jennifer held her ground and asked for a call with the owner before she’d submit. The broker was happy to set it up. But while they worked out the timing, another buyer put in an offer. It got accepted. The deal closed a few months later, with someone else’s name on it.
She was ready to own. She lost the deal anyway. She went looking for certainty too early, and the answers she wanted were sitting in diligence. All she had to do was sign a non-binding LOI.
This is pretty common. Qualified buyers often move too slowly and don’t make enough offers. If you’re slow and you’re not putting in offers, you’re not going to close. Obviously.
I get this can be challenging. Buyers believe they need to feel certain before making an offer. But the acquisition process isn’t designed to do that. Certainty gets built over time during a deal, not all at once up front.
If you’re qualified, get going
For me, a qualified buyer is someone who has the financial capacity to close a deal, a reasonable timeline, and the right experience.
If that’s the case, the next steps are simple. Get into a deal.
Be confident that the experience you bring - your superpower, what made you the success you are - will allow you to achieve that same level of success as an owner.
Don’t be held back by not being confident in a deal up front. If you even remotely think a deal could be a good fit, move forward. Each step allows you to be more confident it’s the right deal, or the wrong deal.
Best case scenario, you find the perfect business. Worst case, you gain valuable lessons that will help you going forward and spend a little time doing so.
Don’t remain on the sidelines waiting for a high degree of confidence that will never come without taking action.
Review deals. Make offers. Get under contract. Believe in yourself and you’ll get across the finish line.
If this was helpful, pass it along to someone looking to buy a business.
I write On Owning for people buying, selling, and growing businesses. Subscribe if that’s you.
And if you’d rather not go it alone, that’s what I do. I work with a small number of buyers through their deals, helping them figure out what’s worth pursuing and what isn’t, while they stay in control. Working on a deal now? Reply and tell me about it.