Here are the “Newton’s Laws” of Buying a Business.
| # | Inescapable Truth | Comment | Note to Seller | Note to Buyer |
| 1 | there are an infinite number of buyers for the perfect business | see emails from buyers (seeking the perfect business) | see truth #2 | see truth #2 |
| 2 | there is no perfect business | but exit planning can optimize the business | see Exit Planning and Business Timing | see Buy a Business with Problems? |
| 3 | most buyers will not buy | brokers say buyers rarely cross the finish line | read sell a business for the first time | read essential tips for buying a business |
| 4 | most business listing do not sell | sources say 10-30% of business listings will sell | read should I sell my business or keep it? | see truth #2 |
| 5 | sellers do not like earnouts or seller financing | CPAs often advise sellers not to consider more than 25% seller financing | see truth #6 | sellers need qualified buyers they can trust to operate and pay |
| # | Inescapable Truth | Comment | Note to Seller | Note to Buyer |
| 6 | businesses tend to not sell for all cash | unless the price is low or there’s an SBA loan | stay open to seller financing / earnouts | cash gets the biggest discount |
| 7 | multiple offers at the same time are uncommon | buyers walk away easily – see multiple offers for a business | when multiple offers happen, they can easily vanish | when a broker says there is another buyer, don’t dismiss it |
| 8 | businesses sell below initial list price | and often sell below current list price | unless the listing is priced well | especially with no seller financing |
| 9 | businesses do not sell for no money down | unless friends and family or distressed business | requires extreme confidence in buyer | read Can I Buy With Little Money? |
| 10 | there are no passive businesses | there are only degrees of owner involvement | make yourself replaceable | read Succeed with Absentee Businesses |
| # | Inescapable Truth | Comment | Note to Seller | Note to Buyer |
| 11 | an attorney’s primary goal is protection | the right attorney has transaction experience for the size of the deal | get a good attorney, but you must be a decision maker | get a good attorney, but you must be a decision maker |
| 12 | a broker’s primary goal is closing | purchase agreements from brokers are balanced for buyer/seller | decide early if you like and trust the buyer or not | you own due diligence, there’s nobody else to blame |
| 13 | there is no perfect buyer | the best byers have money, skill, confidence | another good buyer may not appear | seller confidence in you is critical |
| 14 | buyers pay for the past, not potential | however, potential may help the buyer act | potential with no action does not increase value | seek evidence or steps toward potential |
| 15 | assets are worth the profit they produce | lenders like assets but buyers like cash flows, see Return on Assets | high assets and low profits require a strategic buyer | assets are not created equal, favor real estate |
| # | Inescapable Truth | Comment | Note to Seller | Note to Buyer |
| 16 | a buyer will never know the business like the seller does | until well after closing | the buyer’s final leap of faith hinges on trust in the seller | close the knowledge and trust gap enough to take the leap |
| 17 | success requires stepping into the other side’s shoes | there is no deal if there is no common ground | seller must empathize with buyer’s caution | buyer must respect seller’s attachment to the business |