Your buy box: what you are actually looking for

The short version

• A buy box is a written description of the business you want to buy.
• It comes in two forms. The box is your full list of criteria, for you and your advisors. The sentence version is two or three sentences you send to brokers and owners.
• Brokers and owners answer buyers who have one. They often set aside buyers who do not.
• Be specific about the type of business. "Anything profitable" tells a broker nothing.
• Start rough. Step 3, Work out what you can afford, tells you where to set the size.

Why a buy box matters

Brokers and business owners hear from far more people who say they want to buy a business than will ever close on one. Most of those messages say something like "I am open to anything profitable." Those are easy to set aside.

A buyer who can say exactly what they are looking for sounds like someone who will follow through. That is who gets the call back, the listing before it goes public and the introduction to an owner who has not told anyone yet.

A buy box also helps you. It tells you which listings to skip, so you spend your time on the few that fit.

The box

The box is your working list. It is more detailed than anything you send out, and it keeps you honest when an exciting listing does not really fit. Here is an example:

| What

|

Example

| | --- | --- | |

Type of business

|

Business-to-business services with recurring or contract revenue, such as commercial HVAC and mechanical service, IT managed services, facility maintenance or specialty distribution

| |

Not interested in

|

Restaurants, retail and businesses that depend on a license I could not obtain

| |

Size

|

$750,000 to $1 million in seller's discretionary earnings

| |

Location

|

Within about three hours east or south of Mokena, Illinois

| |

My involvement

|

Full-time owner, ideally with a manager or lead already running day-to-day work

| |

The seller

|

An owner who is retiring, open to staying on for a handover

| |

How I will pay

|

An SBA loan, with at least 10 percent of the total cost from my own funds, and open to a note from the seller

| |

Must haves

|

Steady earnings for at least three years, no single customer over a large share of revenue and a team that stays

|

Seller's discretionary earnings, or SDE, is what the business produces for one full-time owner, including the owner's own pay. Lesson B1.2 covers each line.

The sentence version

This is what you send. It turns the box into something a broker can read in ten seconds:

"I am looking to buy a business-to-business service company with recurring or contract revenue, within about three hours east or south of Mokena, Illinois, earning $750,000 to $1 million in seller's discretionary earnings. I plan to finance with an SBA loan, and I would like to buy from an owner who is retiring and has a team that can run the day-to-day work."

It leads with the type of business, because that is what a broker screens on first. It gives a size and a place. It names how you will pay, which tells a broker you are serious. And it says what kind of seller and business you hope to find.

Name the type of business clearly

The type of business is where most buy boxes are weakest. "Professional services" or "a good small business" could mean almost anything.

Name the kind of work, then give two to four examples. "Business-to-business services, such as commercial HVAC or IT managed services" tells a broker exactly which listings to send you. If you have experience in an industry, put it first. It makes you a stronger buyer and a stronger loan applicant.

Start rough, then tighten

Your first buy box will change. Write a rough version now. After Step 3 you will know your price ceiling and can set the size range to match what you can actually afford. After a few conversations with brokers, you will know which parts of it get the most response.