For many experienced professionals, investors and business owners, the next growth opportunity may not come from starting a business from the ground up, but from acquiring one that is already operating. Buying an existing business is different from launching a startup. The buyer is evaluating a company with a customer base, team, revenue stream, vendor network and operational infrastructure already in place. For the right buyer, that foundation can create a practical path into ownership, expansion or diversification.

Timing is important. A major wave of business ownership transitions is expected over the next decade as many Baby Boomer business owners prepare for retirement. McKinsey estimates that by 2035, about six million small and midsize businesses in the United States will face ownership transitions, with more than one million considered viable candidates for sale or employee ownership. Those businesses represent up to $5 trillion in enterprise value. [1]

For Florida, the opportunity is especially meaningful. According to the U.S. Small Business Administration Office of Advocacy, Florida is home to 3.5 million small businesses, representing 99.8 percent of businesses in the state. These businesses employ 3.8 million people, or 39.6 percent of Florida employees. [2]

When a local business changes hands successfully, the impact can extend beyond the buyer and seller. Employees may remain in place. Customers may continue to be served. Vendor relationships may continue. Communities may retain businesses that have taken years, and sometimes decades, to build.

That is why business acquisition deserves serious attention from qualified buyers.

Important questions include: What is the company’s revenue history? How stable is the customer base? What does cash flow look like? Why is the owner selling? Are there key employees who will remain after the sale? Are there lease obligations, equipment needs, contracts or supplier relationships that could affect future operations? Is there room to grow the business after the transition?

The best opportunities are not always the most obvious ones in the market. Often, they are established businesses with steady demand, a clear operating history, loyal customers and an owner who is willing to support a thoughtful transition.

For current business owners, acquisition can also be a path to expansion. A company may acquire another business to enter a new market, add capabilities, increase production, expand a customer base or bring a complementary service under one roof.

For experienced professionals or investors, acquisition may offer a path into entrepreneurship that starts with an existing operation rather than a blank page.

The SBA 7(a) loan program is the SBA’s primary business loan program and can be used for several eligible purposes, including complete or partial changes of ownership, working capital, equipment, real estate and other business needs. The SBA states that the maximum loan amount for a 7(a) loan is $5 million. [3]

For business acquisition financing, the right structure can help a qualified buyer think through the purchase price, required equity contribution, repayment ability, transition costs, working capital needs and future operating plan.

Just as important, the lending process can help buyers evaluate the strength of the transaction. A buyer may have enthusiasm for the opportunity, but a lender will want to understand the numbers, the business model, the buyer’s experience and whether the transaction is financially sound.

That discipline is valuable. Buying a business is a major decision, and the financing plan should support long term success.

For buyers considering the purchase of an existing business, the next step is to have the right conversations early. That may include speaking with a banker, accountant, attorney, business broker and other advisors who can help evaluate the opportunity from all sides.

The next generation of business ownership is already taking shape. Some businesses will transfer to family members. Some will sell to employees. Some will be acquired by competitors, investors or experienced operators. Others may close if the right buyer and transition plan do not come together.

For qualified buyers, that creates an important question: Is the next business opportunity something you need to build from scratch, or is it already operating?

To learn more about SBA lending solutions and business acquisition financing, connect with a BankUnited business banker.

Michael Marrero

SBA Director, SVP

BankUnited, N.A.

Mobile: (516) 724-0209

Email: MMarrero@BankUnited.com

Sam Angueira

Vice President

SBA Business Development Officer

BankUnited, N.A.

5610 Lemmon Ave STE A2, Dallas, TX 75209

Office: (972)895-2859

Mobile: (817)204-9442

Email: SAngueira@BankUnited.com