How To Buy a Business: Complete Guide (2025)

Buying an online business can set you up with a passive income stream or give you a head start when compared to starting a business from scratch.

While there are thousands of websites and ecommerce stores for sale, not every online business is a wise investment. It’s crucial to do your homework to ensure you’re making a safe, smart purchase.

Ahead, find out how, where, and why to buy a business from an online marketplace.

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How to buy a business

There are standard steps involved in buying an online business, from browsing marketplaces to vetting assets to negotiating sale terms.

Choose a type of business to buy

When looking for a business to buy, first decide what kind of asset you want. Some businesses for sale will be in good health with a regular flow of traffic and sales. Others will be dormant or otherwise in need of repair.

Do you want a business that needs work, or a venture that’s already running smoothly?

• Early stage or dormant businesses are likely to take more of your time and effort to (re)build but could grow into a lucrative investment.
• Established businesses are usually more stable and provide a quicker return on your investment but command higher listing prices.

“My husband and I intentionally searched for an established business that needed a few updates to expand its growth,” says Mona Vaughn, owner of the online pet supply store Bean Farm. “Existing businesses typically come with a wealth of data, customer loyalty, and have made a dent in earning market share.

“Our goal was to find a business that had those qualities and was also primed for a visual branding update and a transition to more efficient digital operations or marketing. We felt this would be the best way to make sure our investment had an immediate return with regular sales.”

Some businesses are already servicing their total addressable market and may have limited room for growth without developing a new product or service. Other businesses may have recently opened or still be in the start-up stage.

Browse businesses for sale

After you’ve decided what type of business to buy, it’s time to find it. There are many places to find an existing business for sale, including online marketplaces and business brokerage websites.

• Explore trusted platforms: Check marketplaces like Flippa and BizBuySale, which host a variety of business listings. You can refine your search by criteria like financials, location, and industry type.
• Network locally: Reach out to local business networks or contacts from your industry for insider information and sale opportunities that may not be listed publicly.

Make sure to understand the different business models you might encounter. These include:

• Wholesale and B2B:Wholesale businesses selling products in bulk to other businesses rather than individual consumers.
• Ecommerce stores:Online shops that sell products directly to buyers through the internet.
• Ad or affiliate driven: Websites generating revenue through advertising and affiliate marketing links.
• Inventory-heavy businesses: Physical or online businesses requiring significant management of physical stock.

Explore why the business is being sold

Knowing the reasons behind why a business is for sale is key. Sometimes, the reason is straightforward, like an owner retiring or shifting focus to another venture. Other times, motives can be less clear and your investigation may surface potential issues.

As part of your fact-finding activity, try to:

• Talk to the current owner: Direct conversations can provide insights that are not obvious from looking at financial statements or a website.
• Review financial records: Ask for cash flow statements and the financial track record. Find out if there are outstanding debts or liabilities by asking specific questions about the financial health of the business.
• Inquire about operational issues: Questions about supply problems, equipment condition, and working capital will reveal how smoothly the business is running.
• Examine business plans: Looking at the business plan will give you insight into the owner’s vision and direction for the company. This is also a chance to see if the business has been achieving its goals and adapting to changes in the market.
• Check social media and online presence: Understanding how well the business is performing online, including sales from marketplaces and interaction on social platforms, can offer hints about its reputation and customer engagement.

Value the business

Always attempt to figure out what a business is really worth before deciding to buy it. Don’t just go by the listing price—carry out an independent valuation. This helps during negotiations and ensures you’re making a well-informed decision.

There are several approaches to completing a business valuation. A business broker can connect you with a certified public accountant (CPA) or accredited senior appraiser (ASA) to help value the business you’re thinking of acquiring.

“The seller had a figure in mind, but we needed to consider our own version of its value based on best and worst case scenarios,” says freelance digital consultant Rob Weatherhead of buying his business. “Thankfully, we had a very open dialogue with the seller and so there was no hard bargaining. It was more finding a way we could reach a point both parties were happy with.”

Understanding the value of the business can strengthen your position when negotiating the price. You’ll have clear, justified reasons for your offer, which can lead to a more favorable outcome.

Create a financing plan

When you’re ready to buy a business, figuring out how to pay for it is the next step. Luckily, you don’t always have to find the full amount from your personal funds. There are financing options available to help you purchase a business without upfront capital.

Here are some popular ways to secure financing for a business:

• Traditional bank loans: These are straightforward loans where a bank lends you a specified amount of money which you then pay back over time. If you have a good credit score, getting a personal loan can be a viable option, though the amount might be limited based on your qualifications.
• Seller financing: In this arrangement, the current owner of the business lends you the money to buy the business. You then pay them back over time, according to agreed terms. This can be especially useful if you can’t secure traditional financing.
• Accounts receivable financing: This type of financing allows you to borrow money against the sales you expect to make in the future. A lender will give you cash upfront, and you repay the amount as a percentage of your ongoing sales.
• SBA loans: Provided by the Small Business Administration (SBA), these loans are designed to make it easier for small businesses to get the funding they need. The SBA partners with lenders and covers a part of the loan amount to reduce risk for lenders, making it easier for businesses to get approved.
• Credit union financing: Credit unions sometimes offer more favorable rates than traditional banks, but you typically need to be a member to take advantage of these loans. If you’re already a member of a credit union, this could be a cost-effective way to fund your business purchase.

Negotiate the price

Now that you’ve done your due diligence, it’s time to negotiate the price you’re willing to pay for the business.

Expect that you and the seller will go back and forth in submitting offers and counter offers. You’ll also set out the general terms of the sale during this process, such as whether you want to purchase the assets of the business or just the inventory.

Here’s how to handle the negotiation process:

• Use your valuation as a guide: Your earlier valuation of the business should serve as the foundation for your opening offer. This ensures your bid is based on solid financial analysis.
• Be ready to compromise: It’s rare to get exactly the price you want in any negotiation. Be prepared to meet the seller halfway, or possibly alter the terms to make the deal more appealing to both sides.
• Understand the seller’s motives: If you know why the seller is moving on from the business you can tailor your offer to address their needs. For example, a quick sale might be worth a lower offer price to a seller in a hurry.
• Decide on assets or stocks: Are you buying the tangible and intangible assets of the business, or are you considering a stock (inventory) sale? The decision can impact the legal complexity and potential liabilities involved.
• Keep communication respectful: A good negotiation is about both sides feeling satisfied. Keep the dialogue professional and constructive to help build a positive relationship, which can be valuable after the transition.

Submit a letter of intent

When you’re serious about buying a business, it’s smart to put your intentions in writing. This is where a letter of intent (LOI) comes into play. It aligns all parties on the basics of the deal before diving into the details of contracts.

Here’s what you typically include in an LOI:

• Parties involved: State who is buying and selling. This avoids confusion about the stakeholders involved in the transaction.
• General deal terms: Outline what you are planning to buy and the basic terms of the purchase.
• Requirements and restrictions: If you need to keep details under wraps, this is the time to incorporate confidentiality agreements.
• Timeline: Setting a timeline helps keep the transaction moving forward. It ensures both parties are aware of key dates, like when the detailed purchase agreement needs to be signed.

Review legal and financial documents

After both parties have signed the LOI, conduct a thorough review of the business’s official documentation. This is another chance to make sure you know what you’re getting into before the final purchase.

Examples of documents to examine include:

• Property documents, like commercial leases or rent rolls
• Business registration documents
• Any licensing required for doing business in an industry or location
• Existing contracts and whether they can be transferred over to a new owner
• Marketing and advertising materials
• The business tax returns for the past three years
• Any incorporation documents, certificates, business licenses, etc.
• Current income statements, payroll, balance sheets, and cash flow statements
• Business loan debt information
• Any legal records, like pending litigation

Looking back on her business acquisition, Mona wishes she’d focused more on reviewing financial statements. “I wish I’d had a more solid understanding of profit margins,” she says. “This is easier when there are fewer products, and harder when running a store like ours with over 500 products.

“Knowing which products have the best margins helps in so many areas: budgeting, purchase orders, advertising and marketing costs, and of course, the bottom line: profit.”

Close the deal

Now you’ve done your homework and had detailed discussions, you’re ready to finalize the acquisition. The final purchase agreement is what seals the deal—it’s a legally binding contract outlining the terms agreed upon by both you and the seller.

Here’s how to ensure a smooth closing:

• Consult a business attorney: Having a legal expert review and negotiate the sales agreement on your behalf is a wise move. They can ensure all agreed-upon points are correctly reflected in the contract, safeguarding your interests.
• Secure funds in escrow: Your lender will typically hold the necessary funds in an escrow account. This adds a layer of security, ensuring the funds are only released when all legal formalities are fulfilled.
• Sign the legal documents: Once the purchase agreement is ready and all parties are content with the terms, sign the documents. Make sure you understand every clause in agreement.
• Wait for the release of funds: After all parties have signed the documents and fulfilled any remaining conditions, the funds will be released from escrow to the seller, at which point you officially become the new owner of the business.

Remember not to rush the final part of the process. As George Moulos, CEO of Ecommerce Brokers advises:

“If an acquisition feels too rushed and your intuition makes you feel like the acquisition isn’t the right one for you, I promise there will be other great deals for you in the future.”

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Where to buy a business online

There are established marketplaces for buying and selling online businesses. They list businesses of various types, sizes, and ages—from affiliate websites capturing niche traffic to established stores with customer flow.

Here are some examples of marketplaces where you can browse and buy businesses online. Always perform independent research when choosing a marketplace and contacting sellers.

Flippa

Flippa is a popular platform for buying and selling small businesses, websites, and domains. It’s especially good for finding startup ecommerce sites or blogs with a specific focus. The listings often provide detailed information about the business’s performance, including traffic and revenue data.

Empire Flippers

Empire Flippers requires a thorough vetting process for businesses listed on its marketplace, ensuring the financials and traffic statistics you see are legitimate.

BizBuySell

BizBuySell holds a large database of businesses for sale, including not just online businesses but also brick-and-mortar stores. It offers tools to filter searches by industry, location, and revenue, allowing you to fine-tune your hunt for the right business.

Acquire

Acquire.com is gaining traction for its user-friendly interface and comprehensive listings of tech and web-based businesses. If you’re looking for a tech startup or a software company, this might be the right place.

Read more: Take a look at these 10 best marketplaces for buying an online business.

Why buy a business?

Buying an existing business instead of starting one from scratch brings a range of benefits.

Skip the startup grind

Setting up a new business can feel overwhelming—you’re tasked with building a brand, developing a product, and building a back office. When you buy an established business, the hard part of starting a business is all done for you. All the foundational aspects are already in place; it’s just a matter of stepping in and taking the wheel.

Start selling immediately

One of the biggest perks of purchasing an existing business is the ability to jump straight to sales. From day one, you can focus on scaling and expanding.

Alex Yurek, owner of Detour Coffee Roasters, saw buying an existing business as an opportunity to focus on brand-building.

“There was so much opportunity to renovate the brand, increase what we were doing digitally, and really get the organization into a growth mode,” he says.

Leverage an existing customer base

With an established business, you often gain instant access to a loyal customer base, offering an operational advantage.

“By buying an existing business, we acquired an existing customer database, some level of repeat customers, and a level of set up that meant we could be operational from day one,” says digital consultant Rob Weatherhead.

Acquire valuable intangible assets

When purchasing a business, you often obtain more than just customers or inventory. You’re also buying intangible assets like patents, brand reputation, and customer loyalty. These assets are precious and can take years to develop from zero.

Opportunities to expand

Buying an existing business isn’t just about maintaining current operations; it’s a chance to grow and improve it. You can take an existing business to a global audience or transition into a brick-and-mortar establishment if the business is currently only online.

Things to consider before buying a business

When you’re looking to buy a business, creating a checklist can guide your evaluation process. Focus on these key areas to help ensure a well-informed purchase.

Inventory

Check what products the business has in stock and understand the value of its inventory. If the business promotes itself as "business plus stock at value", ensure you know exactly what’s included. Reflect on whether the inventory fits the future business model you envision.

Equipment

Ensure essential equipment is included in the sale. If the business needs specific equipment to operate, like screen printing machines for a clothing manufacturer, confirm these are part of the deal. Some equipment might be leased or financed, meaning you will take over the payment obligations.

Tax returns

A business’s financial statements give insight into company performance. Ask the current owner to share financial statements from the past five years, including the current balance sheet, profit and loss statements and tax returns.

Sales records

Sales records are an important part of due diligence, because they verify how much the company has made. Analyze business transactions to understand customer acquisition costs and customer retention metrics.

Sales records allow you to understand how much financial runway you’ll have after taking over the company, as Rob Weatherhead advises.

“We didn’t allow for enough investment runway post purchase,” says Rob. “Things take time to get going, even when you buy an existing business, so it is worthwhile keeping some reserves aside.”

Debt disclosure

Have the seller disclose business-related debt before you agree to purchase the company. You’ll be liable for this debt once the business becomes yours.

Run a credit check to see the company’s credit history. If the current owner has late or overdue payments, you might run into difficulties, such as low approval rates or high interest rates when obtaining credit in the future.