The first half of the roadmap to buying your first business

Happy Tuesday!

I get asked constantly for a simple, step-by-step process for buying a business.

So today, I’m sharing the same framework hundreds of Acquisition Ace students have used to find and evaluate their first deal.

Alex bought a $6M last mile delivery SaaS platform after using the training videos and weekly calls as his guide.

He used the training as his compass and learned from others’ shared experiences to close a multi-million dollar deal.

👉 Want training and weekly calls that serve as your compass through the process of acquiring a business? Book a call with our team here.

Know what to look for before you start searching

Before you look at a single listing, get clear on three traits:

• Recurring revenue (customers paying multiple times a year, not one-time purchases)

• Recession resistance (services people need regardless of the economy)

• And a real barrier to entry (licensing, capital requirements, or anything that keeps competitors out)

Also look for profit margins in the 15-35% range.

That tells you the business is being run with real systems in place.

Not too thin to survive a rough patch, not so high that the owner is doing everything themselves.

Get pre-qualified before you fall in love with anything

Talk to an SBA lender early and bring your last three years of tax returns, pay stubs, and a personal financial statement.

They’ll tell you exactly what you can realistically afford.

A rough rule of thumb: for a $1M business, you’ll generally want to see at least $300K in annual cash flow to comfortably qualify.

(Inside Acquisition Ace, members get connected with vetted SBA lenders who specialize in acquisition financing, so you’re not starting that relationship from scratch. To hear more about how our community could help you close your first deal, book a call with our team here.)

Build a real pipeline

This is a numbers game, so expect to look at 20-30 businesses to land 2-3 solid offers.

On-market deals can be found through sites like SMBMarket, filtering for margin range and the kind of “boring” industries that tend to perform well.

Off-market opportunities come from direct outreach - cold emails or LinkedIn messages to business owners, explaining who you are and what you’re looking for.

Evaluate quickly, then move fast on the right ones

Run every deal through the margin and three-pillar checks first.

Then estimate value using a 2-4x cash flow multiple.

Owner-dependent businesses land closer to 2x, while businesses with management already in place can justify closer to 4x.

Watch for red flags like declining revenue, a single customer responsible for more than 10% of total revenue, or personal expenses mixed into the business financials.

Any of these warrant a closer look before moving forward.

Once you’ve found something that checks the boxes, submit an offer. (Most first offers land somewhere below the asking price.)

Though, in competitive situations, you may need to come in closer to market value.

Don’t be afraid to have multiple LOIs out at once. Most will get rejected - that’s just part of the process.

If you want guidance on any part of this process, that’s exactly what the Acquisition Ace community is here to help with.

👉 Book a call with my team here to see if it’s a good fit for you.