Buying a business is a great path to self-employment. You skip the bootstrap phase and step into something with revenue, customers, and a team already in place. It comes with its own pitfalls, though.

I acquired my last business in 2016. I walked in thinking I knew exactly what I was doing. I was wrong about a lot of it.

Here's the thing about businesses for sale: they're like used cars. The seller is showing you their best side while spending as little as possible to get there. Your job is to find what they're not showing you.

A few things worth looking hard at before you sign anything.

  1. Look hardest at what you don't understand. You're drawn to this business because part of it lines up with your skills. That part will be fine. It's the parts you don't understand where the surprises live. Get outside help if you need it.
  2. Know who's actually going to stay. The current owner will tell you everyone is happy and not going anywhere. That's rarely true, and they haven't worked for you yet. Have real conversations with the people who matter, and have a plan if you lose any of them.
  3. A big customer is a big risk, not a selling feature. If one customer is more than 10 to 15% of revenue, that's a huge liability. Customers get indecisive during ownership changes. Know exactly what you're inheriting before you put a value on it.
  4. Understand what the money actually looks like on day one. Look past the headline profit number. What does cash flow look like after the deal closes? What's left to pay yourself? What deferred capital investments are you about to inherit? Sellers won't volunteer the hard stuff. It's up to you to find it.
  5. Deal structure matters more than most people realize. Share sales are an easier transition. Asset sales give you a cleaner slate, but the transition is more complex. Understand the difference, and get the right advice before you decide.

Acquisitions are stressful for everyone involved. A lot of moving parts, a lot of people. Take your time, be critical, and look hardest at the things that make you uncomfortable. That's where the real picture is.