Database Business Search

A framework for finding and buying small businesses, based on Sarah Moore's experience of successfully acquiring a business with no money down.

Initial Search Strategy

• Scrape business databases within 1.5 hour radius of location
• Account for database accuracy being only ~50% correct
• Filter initial criteria:
  • Revenue range: $4-20M
  • EBITDA target: $1.5M+
  • Remove businesses over $100M revenue
  • Remove obvious exclusions (legal firms, accounting firms, franchises)

Key Business Criteria

• Consistent profitability over multiple years
• Established business with proven track record
• Industry is less important than business fundamentals
• Look for "sticky" products/services with recurring revenue
• Seller willing to provide seller financing (25%+ of purchase price)

Outreach Strategy

• Mass outreach approach vs targeted
• Simple, non-technical language in communications
• Avoid industry jargon when speaking with owners
• Get price range discussion early to avoid wasting time
• Focus on businesses that have been consistently profitable
• Look for sellers who understand realistic business valuations

Deal Structure

• Target 3-4x multiple of profits for valuation
• Aim for 25% seller note, 75% bank financing
• Find banks that view seller notes as equity
• Ensure bank has first position on debt
• Keep deal terms simple and straightforward
• Focus on businesses with clear, understandable financials

Search Execution Tips

• Use multiple channels for outreach (email, fax, in-person)
• Create memorable branding/identity during search
• Leverage any unique attributes to stand out
• Don't change anything major in first year after acquisition
• Focus on learning the business before making changes
• Hire/fire fast once you take over

Common Mistakes to Avoid

• Over-focusing on specific industries
• Using complex financial terminology with sellers
• Making immediate changes after acquisition
• Assuming database information is accurate
• Targeting businesses that are too large or complex
• Getting caught up in sophisticated analysis vs fundamentals