How To Buy a Business: Step-by-Step Guide (2026)

Buying a business means acquiring a company that’s already operating. The trade-off compared to starting one from scratch is capital for time. You pay upfront for existing revenue, existing customers, and a financial record you can review before you commit.

In the US, 51.4% of the private companies that opened in the year ending March 2020 were still operating five years later, according to the Bureau of Labor Statistics. A business that has come through that period has years of business behind it, and verifying its records is a key part of the buying process.

This guide covers how to choose the type of business to buy, where to find businesses for sale, how to value and finance a purchase, what to check during due diligence, and how to close. It also explains what acquisitions cost, how long they take, and what changes when the business runs on Shopify.

Buying a business vs. starting one

The biggest difference between buying a business and starting one from scratch is when you need to spend money.

Starting a business spreads costs over time while you build demand. An online store can launch for as little as a few hundred dollars, though startup costs rise once you need inventory, premises, or staff.

Buying a business usually requires spending money upfront. According to BizBuySell, the median sale price for a US small business was $349,250 in the second quarter of 2026.

Buying can also shorten the timeline for entering a new product line, because the operation you need already exists. Kevin Espiritu, founder and CEO at Epic Gardening, took that route when he acquired seed brand Botanical Interests.

“We wanted to get into seeds, but there’s just no reasonable way we could ever build it at the speed that we would need to build it,” Kevin says in an interview with Shopify Masters. The purchase tripled his team overnight and moved Epic Gardening into retail distribution, because Botanical Interests was already stocked in thousands of stores.

Acquiring a business does carry its own risk. Instead of asking whether a new idea will find customers, you’re verifying whether the seller’s claims about the business are accurate. Step 8 explains how to evaluate that.

How to buy a business in 9 steps

1. Choose the type of business to buy
2. Find businesses for sale
3. Understand why the business is for sale
4. Value the business
5. Plan your financing
6. Negotiate the deal
7. Sign a letter of intent
8. Do your due diligence
9. Close the deal

The purchase process includes: choosing a target profile, searching listings, valuing the business, arranging financing, negotiating terms, signing a letter of intent, verifying the seller’s claims, and closing. These steps can be pretty involved, so plan in months, not weeks.

1. Choose the type of business to buy

Decide what condition of asset you want before you start browsing. Some businesses for sale run steadily with regular traffic and repeat customers. Others are dormant, declining, or need a rebuild.

The two profiles carry different price tags and different workloads:

• Early-stage or dormant businesses. These cost less to acquire, but need an additional investment of capital and time before they produce reliable cash flow.
• Established businesses. These have a track record you can verify, and often command higher selling prices as a result.

BizBuySell found that 86% of buyers were seeking recession-resistant businesses in the second quarter of 2026, and 64% wanted businesses that were already thriving. Profitability ranked above growth potential and industry stability as the most important factor when evaluating a business purchase.

Consider the business model alongside the condition of the business. A wholesale operation selling to other business owners runs on different economics from a direct-to-consumer store, and an ad-supported content site carries a different risk profile, as well. If the structure is unfamiliar, start by familiarizing yourself with what a business is in legal and operating terms, and how a small business differs in scale and obligations.

Buy in an industry where you have experience

Sellers of in-demand businesses screen the buyers who approach them, and industry experience is one of the things they look for. Brokers quoted in the BizBuySell report describe a market where the supply of quality businesses lags the number of qualified buyers competing for them.

“The market is saturated with well-capitalized, experienced buyers who possess impressive résumés,” says Matt Coletta of M&A Business Advisors in the BizBuySell report. Sellers deprioritize buyers who negotiate aggressively or attach difficult conditions, and favor candidates who arrive with financing arranged and sector experience behind them, says Matt.

To determine target size, use the market medians as a first filter. Businesses that sold in the second quarter of 2026 had median revenue of around $692,000 and median cash flow of $156,000, according to BizBuySell, so a target well above that range means a larger down payment and a bigger loan.

2. Find businesses for sale

Businesses for sale reach buyers through three channels—marketplaces, brokers, and direct outreach—and each one hands over information at a different point. Marketplaces publish the details up front. Brokers hold them back until you’ve signed a non-disclosure agreement (NDA) and shown you can pay. With direct outreach, there’s nothing to hand over, because nobody has decided to sell yet. Here’s a bit more about each channel:

Online marketplaces

Online marketplaces publish listings with financials and asking prices, filtered by industry, location, and revenue. Four platforms carry ecommerce and small business listings:

• Flippa. These listings cover websites, domains, and small ecommerce businesses, with performance data attached.
• Empire Flippers. The platform screens listings before publishing them.
• BizBuySell. The database covers online businesses alongside premises-based businesses.
• Acquire.com. Their listings focus on tech and software businesses.

Note that listing figures come from the seller, so treat them as claims to verify at Step 8.

For a fuller comparison of platforms, see the guide for buying an online business.

Business brokers

When a broker is working for the seller, their commission comes out of the sale price, so their job is getting the best result for the other side of the table. Ask who a broker represents and how they’re paid before you take their view of a deal at face value.

Expect to sign an nondisclosure agreement (NDA) and show proof of funds before a broker hands over detailed financials. To find one, BizBuySell publishes a directory of business brokers searchable by location and specialty.

Ask early whether the business is likely to clear a Small Business Administration (SBA) lender’s review, because that can shape the rest of the deal. Brokers in the BizBuySell report say businesses that qualify attract more qualified buyers. If a business doesn’t meet those requirements, buyers may need to shift away from bank financing and instead rely more heavily on seller financing, concessions, or other structured terms.

Local networks and direct outreach

Direct outreach means building your own list and approaching owners who haven’t already decided to sell. There’s no listing, no asking price, and no competing bidders, so the terms start open rather than set.

The trade-off with this approach is time. Expect conversations that go nowhere, and anticipate doing the research a listing would otherwise hand you.

For your best chance at success, consider working through these sources: 

• Industry associations and trade groups in your sector
• Local chambers of commerce and business networks
• Suppliers and distributors who see which accounts are winding down
• Accountants and attorneys who advise owners approaching retirement

3. Understand why the business is for sale

Ask why the owner is selling, and treat the answer as a claim to verify rather than context.

Retirement was the leading reason owners planned to sell in the second quarter of 2026, cited by 45% in BizBuySell’s survey. Pursuing a new opportunity followed, at 29%, burnout, at 21%, and economic uncertainty, at 13%.

In Cornerstone Business Services’ 2025 National Study on Selling Your Business, 48% said they wanted to exit within three years. The sample was 750 US owners aged 45 to 75 running companies with $5 million to $100 million in annual revenue, well above the median revenue of businesses that actually sold.

For the most part, however, that intent has not turned into listings. Brokers in the BizBuySell report say the expected wave of retirement sales has not arrived, with some owners winding down or handing the business to family rather than selling. First time buyers should plan for a thin market rather than a flood of options.

Test the stated reason against the records. An owner retiring after 20 years should be able to produce accounts going back that far, along with supplier and customer relationships that predate the sale. Falling margins, revenue concentrated in a few accounts, or operations that depend heavily on the owner may suggest that the seller’s stated reason for selling isn’t the whole story.

Red flags to watch for

Some findings justify walking away and others justify a lower offer. Either way, they need an answer before you sign anything.

Watch for these during early conversations:

• Financial statements that don’t reconcile with tax returns
• Revenue concentrated in one or two existing customers
• A seller unwilling to provide detailed financials after an NDA is signed
• Recent litigation, unpaid tax liabilities, or undisclosed legal issues
• Key supplier or landlord contracts that don’t transfer to a new owner
• A business that depends entirely on the current owner’s relationships or presence

4. Value the business

A business valuation estimates what a company is worth, independent of what the seller is asking. Small business valuations use three methods:

• The asset method: Totals the business assets, tangible and intangible, and subtracts liabilities
• The earnings method: Applies a multiple to the profit the business generates
• The market method: Compares the business against recent sale prices for similar businesses in the same sector

For owner-operated businesses, the earnings method runs on Seller’s Discretionary Earnings (SDE). SDE is net profit with the owner’s compensation and discretionary or non-recurring expenses added back, so buyers can see what the business would produce for a single working owner.

Take a business reporting $600,000 in revenue and $80,000 in net profit, for example. Add back the owner’s $70,000 salary, $12,000 in personal vehicle costs run through the business, $8,000 in one-time legal fees, and the SDE comes to $170,000.

Apply BizBuySell’s average cash flow multiple of 2.7 to that figure, and the business lands at roughly $459,000. That’s a starting point for negotiation rather than a price, because multiples vary by sector and by the condition of the individual business.

The same report found that steady earnings, documented books, and a long operating record are what earn the higher multiples, while a business that leans heavily on its owner draws more caution.

Only 14% of owners had completed a professional valuation, BizBuySell found, while 50% worked from a rough estimate and 35% had no idea what their business was worth. Cornerstone’s study found a similar pattern among larger companies, where fewer than 4 in 10 owners had ever had a real market analysis done by a mergers and acquisitions firm.

If the seller has never had a valuation, their asking price is an opinion rather than a finding. A business valuation from a certified public accountant or an accredited appraiser gives you a number you can defend when you make an offer.

What’s more, who you hire shapes the usefulness of that number. 

“I would always recommend trying to find a consultant who is within your industry who can help you put a value on your business,” says Dave Carlson, founder and president of Wildflower Cases, in an interview with Shopify Masters.

5. Plan your financing

In BizBuySell’s second-quarter 2026 survey, 78% of buyers said they expected to use SBA financing for an acquisition. No SBA loan covers the whole price, because the program requires the buyer to put in cash, so deals combine more than one source.

The main financing options are as follows:

• SBA 7(a) loans. Government-guaranteed loans made through participating lenders, capped at $5 million per loan. The SBA approved 77,600 7(a) loans worth $37 billion in fiscal year 2025, according to the agency.
• Seller financing. The seller lends part of the purchase price and you repay them on agreed terms.
• Conventional bank loans. Term loans priced on your credit history and collateral, with terms set by the lender rather than by SBA rules.
• Credit union financing. Loans from a member-owned institution, which requires you to join before you can borrow.
• Rollovers as business startups (ROBS). An arrangement that rolls a 401(k) into a new corporate retirement plan that then buys stock in the company, without triggering an early withdrawal penalty. ROBS structures carry ongoing IRS compliance obligations and put retirement funds at risk if the business fails, so take advice from a tax specialist before moving forward with this option.

SBA rules changed in 2025, impacting how much cash you need at close. Under the SBA’s Standard Operating Procedure 50 10 8, effective June 1, 2025, a change-of-ownership 7(a) loanrequires an equity injection of at least 10% of total project costs.

A seller note (a loan from a business seller to a buyer) counts toward that 10% only if it sits on full standby, with no principal or interest paid for the entire term of the SBA loan. Even then, it can supply no more than half the required injection.

Collateral can also reach beyond the business itself. SBA acquisition loans are secured against available business assets, and personal real estate can be pulled onto the collateral schedule when business assets don’t cover the loan. Ask your lender to run the collateral analysis before you sign a letter of intent, not after.

Buyer and seller expectations diverge on seller financing. BizBuySell found that 90% of buyers expected seller financing to form part of their acquisition strategy, while only 29% of owners planned to offer it, and almost half ruled it out entirely.

Set aside working capital—funds to cover the business’s ongoing expenses—in addition to the purchase price. Payroll, inventory, rent, and supplier payments continue through the transition, and a purchase that consumes every available dollar can leave you without enough cash to run the business. If you already sell on Shopify, Shopify Capital offers funding with repayment tied to a percentage of daily sales.

If the down payment is your obstacle to purchasing a business, then check out the guides to getting money to start a business and finding investors.

6. Negotiate the deal

Negotiation covers more than the purchase price. Deal structure decides what you acquire, which liabilities follow, and how much of the price depends on the business performing after you take over.

Structural terms worth negotiating include:

• Earn-outs. Part of the price is paid later, contingent on the business hitting agreed revenue or profit targets.
• Seller notes. The seller carries part of the price as a loan, which reduces the cash you need at closing.
• Consulting agreements. The seller stays on for a defined handover period at an agreed rate, transferring relationships and operating knowledge.
• Asset purchase or stock purchase. An asset purchase transfers selected business assets, and liabilities stay with the seller unless the agreement says otherwise. A stock purchase transfers the company whole, including its legal obligations.
• Non-compete agreements. The seller agrees not to start or join a competing business within a defined area and period.

Open from your own valuation rather than from the asking price. Where the two sides can’t agree on value, brokers in the BizBuySell report point to seller notes as the bridge, because even a small note lowers the equity a buyer has to find at closing.

A business lawyer should review the deal structure before terms are agreed, not after. The difference between an asset purchase and a stock purchase changes which legal obligations transfer to you, and that difference is difficult to undo once documented.

7. Sign a letter of intent

A letter of intent (LOI) records the agreed shape of the deal before the lawyers draft a purchase agreement. Most of the document is non-binding, which is what allows both sides to commit to a direction without committing to a contract.

An LOI covers:

• The parties of the transaction
• The purchase price and proposed deal structure
• The business assets included in and excluded from the sale
• Confidentiality obligations covering the financials you’re about to receive
• A timeline for due diligence and closing

The binding clauses are the ones to read closely. Confidentiality holds regardless of whether the deal completes, and exclusivity—sometimes called a no-shop clause—stops the seller from negotiating with other potential buyers for a window the LOI defines.

Exclusivity protects the money you’re about to spend. Due diligence carries accounting and legal fees, and those are sunk if the seller accepts another offer midway through.

8. Do your due diligence

Due diligence is the verification stage: You test the claims the seller has made and go looking for the facts they left out. It runs after the LOI is signed, when the seller opens the books, and it’s the last stage at which you can walk away without breaching a binding agreement.

Diligence spans the financials, the contracts, and the day-to-day operation of the business. To cover your bases, check everything on this list: 

• Financial statements. Profit and loss statements, balance sheets, and cash flow statements for at least three years, reconciled against filed tax returns.
• Tax returns. Business tax returns for three to five years, obtained from the filing record rather than the seller’s copy where possible.
• Debt and liabilities. All outstanding loans, credit lines, supplier arrears, and personal guarantees, plus a credit check on the company.
• Inventory and equipment. A physical count and condition check, with confirmation of what is owned outright and what is leased or financed.
• Contracts and leases. Commercial leases, supplier agreements, and customer contracts, checked for assignment clauses that determine whether they survive a change of ownership.
• Legal documents. Incorporation documents, business licenses, permits, and any pending or historical litigation.
• Intellectual property. Trademarks, patents, designs, and domain names, with confirmation that each is registered to the selling entity and transfers at close.
• Customers and staff. Revenue concentration across existing customers, retention rates, employment contracts, and which staff intend to stay.
• Sales and marketing records. Traffic sources, customer acquisition costs, advertising accounts, and the login credentials for each.

Read the accounts against how the business runs. Reconciled statements won’t tell you which product lines carry the margin or which customers are drifting away, so ask for the bookkeeping underneath them, broken out by product and by customer.

Watch for models that look similar on paper but behave differently in operation. Epic Gardening found this after acquiring Botanical Interests, a business that sold primarily through wholesale distribution rather than direct to consumers.

“You’re selling at wholesale pricing, it’s B2B, so you have to wear a different hat when you’re on that side of the business, thinking about how to service your customer—which isn’t the person buying the seed, it’s the nursery that’s carrying the seed,” says Kevin, founder and CEO at Epic Gardening.

Legal form belongs on the checklist, too. If the target’s organizational structure or legal form doesn’t suit how you plan to run it, the time to find out is now, not after close. Note that a limited liability company (LLC) and a sole proprietorship carry different obligations for the owner.

The guides to what an LLC is,sole proprietorship vs. LLC, and starting an LLC cover the structures you may be acquiring or converting into.

9. Close the deal

Closing turns the agreed terms into a binding purchase agreement and moves the money. The purchase agreement supersedes the LOI and governs the transaction from that point.

Closing proceeds as follows:

• Your business lawyer reviews and negotiates the final purchase agreement.
• Your lender places the funds in an escrow account.
• Both parties sign the purchase agreement and associated transfer documents.
• Escrow releases the funds to the seller and ownership transfers to you.

Plan the handover before you sign. The first 12 months are the transition period, when customers, staff, and suppliers work out what has changed and decide whether to stay.

One approach is to change very little at first. Amit Mahtani, second-generation owner of Montreal bagel shop and deli Bagels on Greene, took over for his parents and moved slowly enough that customers barely registered the transition.

“We didn’t change anything too drastically right in the beginning. We made small changes, so they amount to a big change over the year, but nothing so dramatic that you would notice it instantaneously,” Amit says in an episode of Shopify Masters. “Four or five years down the line, we still had people coming up to us and saying, ’Hey, is this new owners now?’”

Also, it’s worth noting that transferring the operational accounts is a separate job from the legal close. Payment processors, advertising platforms, supplier portals, email systems, and the domain registrar each need to be transferred into your name.

The guide to managing a business covers what to put in place once all the accounts are moved over.

Transferring a Shopify store

If the target runs on Shopify, ownership moves through the Shopify admin. The Help Center covers both routes: transferring to an existing user on the account, or to a new owner outside the seller’s business. Check for blockers before you set a closing date, because a store using Shopify Capital or Shopify Credit can’t be transferred, and an active Shopify Balance account has to be emptied first.

Domains move separately. A domain purchased through Shopify transfers from the Domains page in the admin. Shopify’s documentation covers a transfer to another store or to an outside provider. Third-party domains have to be moved at the registrar.

If the store needs rebuilding rather than maintaining, the guides to opening an online store and the starting a business checklist can help. They cover all the groundwork to revisit under new ownership.

How much does it cost to buy a business?

Buying a business costs a median of $349,250 in the US, based on closed transactions BizBuySell recorded in the second quarter of 2026. That figure covers the purchase price alone, before financing costs, professional fees, and working capital.

Sale prices vary by sector. Restaurants sold at a median of $205,000 in the quarter, retail businesses at $250,000, service businesses at $350,000, and manufacturers at $704,500.

Use these benchmarks to size a purchase:

• Average cash flow multiple: 2.7 times SDE
• Average revenue multiple: 0.7 times annual revenue
• Median cash flow of businesses sold: $155,921
• Median revenue of businesses sold: $692,087

Your cash requirement is a fraction of the purchase price if you finance the deal. An SBA 7(a) change-of-ownership loan requires an equity injection of at least 10% of total project costs, which on a $350,000 purchase is roughly $35,000 before closing costs and working capital are added to the project total.

That 10% is a floor rather than a target, and individual lenders set their own requirements above it. For scale on the debt side, the SBA’s 77,600 7(a) approvals in fiscal year 2025 totaled $37 billion, an average of about $477,000 per loan across all 7(a) purposes rather than acquisitions alone.

Be sure to set aside enough money (beyond the purchase price) for legal and accounting fees during due diligence. Factor in the costs of any loan fees and interest on the acquisition debt, and enough working capital to cover payroll and supplier payments through the transition.

How long does it take to buy a business?

Buying a business generally spans months rather than weeks. Service businesses sold in the second quarter of 2026 sat on the market a median of 155 days before finding a buyer, according to BizBuySell. For online businesses, Empire Flippers reports an average sale duration of 125 days across the 2,664 businesses sold through their marketplace.

The purchase timeline breaks into five phases:

• Search and first contact. Identifying targets, signing NDAs, and reviewing initial financials.
• Valuation and offer. Independent valuation, offer, and negotiation of price and structure.
• Letter of intent. Agreeing to the deal shape and opening the exclusivity window.
• Due diligence. Verifying financials, contracts, and operations inside the exclusivity period.
• Financing and closing. Lender underwriting, final documentation, escrow, and transfer.

Diligence and financing run in parallel rather than in sequence, because lenders underwrite against the same documents you’re verifying. Brokers in the BizBuySell report describe tighter SBA underwriting as a source of friction at that stage, with stricter documentation slowing deals toward closing.

Exclusivity is what holds the timeline together. Once the no-shop window closes without a signed purchase agreement, the seller is free to reopen negotiations with other buyers.

Pros and cons of buying an existing business

The case for buying rather than starting depends on your capital, your experience, and how much time you have.

Buying an established business offers these advantages:

• Immediate cash flow. A business that’s already operating produces revenue from the day you take over.
• Existing customers. You acquire a customer base along with the sales records showing how often those customers return.
• Verifiable numbers. An operating history gives you financial statements and tax returns to examine, which a new business can’t offer.
• Intangible assets. Brand recognition, intellectual property, supplier relationships, and staff expertise may transfer with the sale, subject to the contracts and registrations you check at Step 8.
• Financing options. Lenders underwrite against a documented track record, and SBA 7(a) change-of-ownership loans exist for these transactions.
• Room to expand. An operating business gives you a base to extend into new channels, products, or markets.

The same purchase carries these disadvantages:

• High upfront cost. You pay for that operating history at the front of the process, while starting a business from scratch spreads costs over time.
• Inherited problems. Debt, disputes, underperforming stock, aging equipment, and staff issues can come with the business, depending on how the deal is structured.
• Constrained choices. The brand, product range, systems, and supplier contracts are already set, and changing them takes time.
• Transition risk. Customers and staff may leave when ownership changes, particularly where relationships ran through the previous owner.
• Opportunity costs. Capital committed to the purchase is capital unavailable for growth in the first year.
• Diligence burden. Verifying a seller’s claims takes time and professional fees, whether or not the deal completes.

Related paths sit between the two. Buying a franchise gives you an established operating model without acquiring an existing company, and a reseller business or private label operation lets you build on existing products rather than developing your own.