Thinking About Buying a Business? Start With These Essential Steps

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 884 words

Before you look at a single listing, decide what you want to buy, how you will pay for it and who will advise you. Buyers who do that groundwork first are taken seriously by sellers, move quickly when the right company appears, and are far less likely to fall for a business that only looks good on the first page of its marketing package.

The steps below cover the stretch before any offer is made. Evaluating a specific company, negotiating and due diligence come later, and each goes more smoothly when this part is done well.

Write down what you are looking for, and why

Start with a one-page buying brief. It forces decisions that many first-time buyers put off until they are standing in someone else's warehouse. Choose a business you would enjoy running, not only one that looks profitable: owners who bought purely on the numbers often find, a year in, that they dread the work, and it shows in the results.

• Industry and model. Which kinds of companies do you understand, or could you learn quickly? A repeat-customer service business, a distributor and a small manufacturer run very differently.
• Your role. Do you want to run the company day to day, or buy one with a manager already in place? The answer changes which companies fit.
• Size. Set a range of earnings you can afford to buy and still live on after the debt is paid.
• Location. Be honest about how far you are willing to drive every week.
• Deal breakers. Heavy dependence on one customer, a shrinking market, or a company that only works because the owner is there every weekend.

Know your money before a seller asks about it

Sellers and their advisors will ask how you plan to pay before they share anything confidential. Work out three figures: the cash you can put in yourself, the reserve you must keep for living costs and the company's first months under you, and the amount a lender is likely to lend against the earnings of the kind of company you want.

Talk to a lender early. Loans backed by the SBA 7(a) program are common for smaller acquisitions, and larger purchases usually combine bank debt with seller financing or outside investors. A lender conversation tells you what size of company is realistic and which documents you will need; our overview of acquisition financing explains how the pieces usually fit together. Gather your personal financial statement, recent tax returns and proof of funds now, so you are not scrambling when a good company comes up.

Line up your own advisors

A seller's broker or M&A advisor works for the seller. They can be helpful, open and fair, but their duty runs to the owner who hired them. You need people whose duty runs to you:

• A CPA with acquisition experience, to test the seller's earnings and tell you what the company really produces in cash.
• A transaction attorney, to structure the purchase and review the letter of intent and purchase agreement.
• A lender or financing advisor who has closed business acquisitions, not only real estate or equipment loans.

Expect to be screened, and make it easy

Established companies are rarely advertised under their own names. Serious sellers use blind profiles that describe the business without identifying it. To see more, you will usually register, sign a nondisclosure agreement (an NDA, a promise not to share or misuse what you learn) and complete a financial profile showing you can fund the purchase. Our explanation of how buyers are screened sets out what advisors look for.

Treat the screening as your first impression. Answer completely, name everyone involved in the decision, including a spouse or an investor, and say what timeline you are working to. A buyer who is vague about money, or who keeps asking for the company's name before signing anything, tends to drop to the bottom of the list.

Use the first meeting to learn, not to negotiate

Once you have the marketing package, read it twice and write your questions before you meet the owner. Ask how the business wins and keeps customers, what the owner actually does each week, which employees are essential, what has changed recently and what worries the owner about the years ahead. Leave price for later. The purpose of a first meeting is to decide whether the company deserves the time and money a full evaluation will cost.

If it does, the next stages are a close review of the numbers, a written offer (usually a nonbinding letter of intent) and then due diligence, the detailed check of everything you were told. Seeing how a seller's advisor sequences a sale, as in the ten-step process we run for owners, helps you anticipate each stage.

Where MDR & Associates fits for buyers

MDR & Associates represents owners selling established, profitable companies with $3 million to $100 million in annual revenue, most of them in Texas. We do not represent buyers, but we work with them every day. Qualified buyers who register with us sign an NDA, complete a financial profile and then receive blind profiles of companies that match their criteria, and we can arrange SBA, conventional and seller-financed structures when a deal needs one. To see what is available, start at buy a business.

Where this fitsBuy a business in Texas →

Questions owners ask next

How much of my own money do I need to buy a business?

It depends on the price, the lender and how much the seller is willing to finance. Lenders expect the buyer to put in real equity and to keep a reserve after closing. Talk to a lender before you start shopping, so the companies you pursue are ones you can actually fund.

Should I buy a business in an industry I have never worked in?

You can, but the learning curve becomes part of the risk. Buyers from outside an industry do best when the company has experienced managers or key employees who will stay, and when the seller agrees to a meaningful transition period to pass on customer and supplier relationships.

Can I see a company's name before signing an NDA?

Usually not. A confidential sale protects the seller's employees, customers and competitive position, so the name and the detailed financials are released only after you sign a confidentiality agreement and show you can fund the purchase. Buyers who refuse that step are normally not given further information.