10 frequently asked questions about buying a business. Direct answers from the WETYR research team.
How much money do I need to buy a business?
SBA 7(a) requires 10% down for business acquisitions, so $100K cash buys a $1M business. Self-funded searches typically require $200K-$500K personal capital. Sponsored search funds raise $400K-$700K to fund the search itself. Keep reserves for working capital after closing.
How do I find a business to buy?
Three sources: brokers/marketplaces (BizBuySell, broker networks), proprietary outreach (cold campaigns to owners), and search fund networks. Off-market deals (proprietary outreach) typically have less competition and better terms. Define your target industry, size, and geography first so you can screen opportunities quickly.
What is an SBA loan for business acquisition?
SBA 7(a) loans up to $5M for business acquisition. 10% down payment required, 10-year term, market rates. Personal guarantee required. Slow application process (60-90 days) but standard for first-time buyers. Buyers should plan for working capital on top of the down payment, and sellers are often asked to hold a small note alongside the loan.
What is a search fund?
Investment vehicle where investors fund 6-24 months of searcher salary plus search expenses to find and acquire a single business. Investors get equity in the acquired company. Stanford GSB and HBS originated the model. Searchers usually target stable, profitable businesses with a clear path to growth.
Self-funded search vs traditional search fund?
Traditional search: investors fund search + salary, take 50%+ equity. Self-funded: searcher uses own capital, retains 70-90% equity. Sponsored search: a single PE firm or family office sponsors the search. Each fits different risk profiles. Pick based on how much capital and control you want to keep.
How do I evaluate a business I want to buy?
Run financial diligence (QoE), operational diligence (systems, team, customers), legal diligence (contracts, IP, litigation), and commercial diligence (market, competition). Operational diligence often catches what pure financial diligence misses, so many buyers hire separate help for it. Start with three years of financials and the reasons behind any changes in the trend.
What is a typical earnout for a business acquisition?
Earnouts run 1-3 years and 10-40% of purchase price. Common metrics: revenue, EBITDA, customer retention. Negotiate clear measurement methodology and protection from buyer-driven changes that affect targets. Define the metric, the measurement period, and the seller's reporting rights in the purchase agreement, and keep the term short where possible.
How long does the buying process take?
From first conversation to close: 4-9 months. Sourcing 1-3 months, due diligence and LOI 1-2 months, definitive agreement 1-2 months, financing and closing 1 month. Faster with experienced buyers and clean targets. Having financing lined up before the LOI keeps the closing on schedule.
Can I buy a business with no money down?
Rarely. SBA 7(a) requires 10% down. Some sellers accept 100% seller financing on small deals. Creative structures (rollover equity, earnouts) can reduce cash required but rarely to zero. Plan for at least 10% cash plus working capital. Sellers who finance most of the price usually ask for more security in return.
How do I do post-close integration?
100-day plan: customer retention, employee retention, financial reporting, basic operational changes. Major changes (rebrand, restructure) come after day 100. Overly aggressive change in the first 100 days is a common way acquisitions lose value. Tell customers and key employees early what will not change.
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Last updated: 2026-04-28
Buying A Business: Common Questions Answered
This FAQ collection answers the questions WETYR receives most often about buying a business. Each answer is written by operators who have lived the work - not lifted from generic advisor templates. Owners and operators who read these FAQs end up walking into their next conversation with WETYR (or with any advisor) substantially better prepared, which is the goal. Better-prepared clients reach better outcomes. We give the answers away because that compounds trust.
The questions cover the practical side of buying a business - pricing, timeline, who-does-what, decision frameworks, and the trade-offs that aren't covered in generic content. If your specific question isn't on this page, the right next step is either the relevant long-form guide or a direct call with our team. We respond to every inbound inquiry within one business day.
When To Engage An Advisor
The general rule for buying a business: engage an advisor 12-24 months before the transaction window if you have flexibility, or as soon as possible if the window is shorter. Owners who engage 6+ months out routinely receive premium offers; owners who engage 30 days out routinely accept whatever the buyer puts on the table. The pre-engagement diagnostic is where most of the leverage is created.
For buying a business-specific questions, WETYR's role is narrower than an advisor's. WETYR can introduce owners to registry buyers whose buy box fits, free to owners, help buyers find off-market targets, or buy a business directly for its own account. If you want someone to run a sale process or negotiate for you, hire your own licensed broker or advisor. The free introductory call is the cleanest way to see whether any of WETYR's options fit your situation.
Authoritative Sources & Further Reading
WETYR relies on primary sources, regulators, and industry data providers for its research and education. The references below are the same sources our research team uses when benchmarking multiples, modeling acquisitions WETYR makes for its own account, and stress-testing assumptions. We encourage every owner, buyer, and operator to verify any data point that materially affects their decision against the underlying primary source.
Primary Federal Sources
- U.S. SBA - 7(a) Loan Program for acquisition financing eligibility, terms, and lender list.
- SEC EDGAR for public-company comparables, 10-K disclosures, and recent strategic acquirer filings.
- IRS - Sale of a Business on Section 1060 asset-allocation reporting and tax treatment of asset vs stock sales.
- U.S. Bureau of Labor Statistics - Industries at a Glance for wage, employment, and growth data by NAICS code.
- U.S. Census Economic Census for industry size, firm counts, and revenue distributions.
- Federal Reserve Economic Data for prevailing rate environment underwriting.
Standards & Reference Bodies
- AICPA for Quality of Earnings methodology and CPA standards governing transaction-related financial work.
- FINRA Rules and Guidance for understanding when a transaction crosses into broker-dealer territory.
- NACVA business valuation credentialing body and standards (CVA designation).
- USPAP - Uniform Standards of Professional Appraisal Practice for valuation engagement standards.
- Investopedia - EBITDA reference page for definitional alignment with our glossary.
- Harvard Business Review - Mergers and Acquisitions archive on integration and post-close value creation.
For deeper transaction-specific data, the GF Data and PitchBook private-company transaction databases publish quarterly multiple ranges by industry size band that we cross-reference against our own pipeline benchmarks. Owners considering a sale should also review the Pepperdine Private Capital Markets Report (free, annual) for current cost-of-capital and lender appetite data across the lower middle market. Buyers underwriting search-fund or holdco theses commonly pair Stanford GSB's Search Fund Study with the IBBA Market Pulse report, which tracks multiples for sub-$50M transactions quarterly. None of these sources replace deal-specific advice from your own attorney, CPA or advisor, but they give owners and operators the same reference points professional acquirers are using on the other side of the table.
Related WETYR Resources
Every WETYR resource connects to a practical next step. Whether you are diagnosing readiness, modeling a number, or preparing for a specific transaction phase, the resources below cover the most common owner and operator workflows. All tools are free; all guides are operator-written; every conversation with WETYR starts in confidence.
Engagement Pillars
Decision Tools
Operator-Written
Glossary & FAQ
Checklists & Templates
Niche Coverage
If you are not sure where to start, the Exit Readiness Score takes about four minutes and produces a one-page diagnostic on the value drivers most likely to compress your multiple. From there the natural next step is either a long-form guide covering your specific situation, a focused glossary term lookup, or a confidential introductory call with our team to see whether a buyer introduction, buyer sourcing, or a direct offer from WETYR as a buyer is a fit. Our team responds to every inbound inquiry within one business day.
WETYR provides business consulting, marketing to find acquisition targets for buyers, and introductions between business owners and buyers. WETYR is not a business broker, M&A advisor, investment bank, registered broker-dealer, FINRA member, SEC-registered investment adviser, attorney, or CPA. WETYR does not negotiate for either side; price and terms are set by the owner and buyer with their own advisors. After an introduction, owners and buyers deal directly with their own attorney, CPA and, if they choose, their own licensed broker or advisor. Transactions involving real property or securities require appropriately licensed professionals. Information provided on this website is for general informational purposes only and is not legal, tax, accounting, or investment advice. Consult your own qualified professionals before making any business or financial decision. Past results do not guarantee future outcomes.