The subtle art of off-market acquisitions

While most people are fighting over the same overpriced businesses on BizBuySell...

There are a ton of successful companies whose owners have never thought about selling.

But they can and will, if the right offer comes along.

These are “off-market deals.”

Meaning: they’re not officially listed for sale anywhere, and no broker is involved.

Let’s talk about why you should (or shouldn’t) go this route:

Pros of off-market sourcing

• There’s zero commission fee

Brokers usually take 8% to 12% of the selling price off the top.

Going straight to the owner gives you that much more wiggle room in your price.

• Off-market deals help fill up your pipeline

Buying businesses is a numbers game.

This is why I tell my students to do both off-market and on-market sourcing at the same time.

• You’re leading the negotiations instead of the broker

You’re the authority — you’re telling the owner what their company’s worth and how you want to structure the deal.

And if it’s truly off-market, then the seller is not getting any offers from other buyers!

• There’s more room for creative financing

Brokers get their commission at closing.

So they’ll push you to go super heavy on lending — SBA loans, commercial financing, etc.

Cons of off-market sourcing

• These are cold leads

You’ve got to put in legwork to find them and convince them to sell.

• There’s no guarantee the seller has their finances in order

If they’ve been DIY-ing their taxes with sloppy bookkeeping for years, you may need to hire an expert to do a proper valuation.

An off-market story from one of my students

One of my students (Adam) bought a marketing agency off-market from two partners.

Adam has a marketing background and knew exactly how to scale the business, so he jumped at the chance to buy it.

He structured a deal where he did an SBA loan + 25% seller financing.

Then he put that seller financing on full standby (no payments for 2 years).

The bank counted that as his buyer injection of capital.

In plain English:

He bought a marketing agency (listed at $3.8M) off-market for $2.79M with zero out of pocket.

And in year one, he’ll be cashflowing over $1 million.

Let me be clear, this is not standard. This was a home-run deal that took months of hard work plus a lot of luck.

But even for average deals, off-market is still one of the best ways to go.

Want to learn how to find and finance off-market businesses for $0 down, like Adam did?

Or, how to passively invest as a silent partner?

Fill out our 2-minute Interested Investor Survey, and tell us your goals and budget.

Or if you’d like to sell a business, tell us more about it here.

And stay tuned for Tuesday’s issue of the Acquisition Ace newsletter!

— Ben Kelly