Success story: buying a business directly from the owner

Buying a business is an exciting and busy time.

Due to the numerous complex procedures involved in the course of buying and selling a company, brokers are often enlisted for their services. Their in-depth knowledge on the matter, network to connect and source the right people, and ability to ease along the technical processes makes using a broker a traditional and easy option for such transactions.

It is, however, completely possible to buy a business without a broker.

In fact, buying a business without the middleman may be a better option in certain circumstances, especially when you have very specific requirements.

Eliminating the broker essentially means buying a business directly from the owner. But the question then becomes, how do you go about finding a seller?

The point needs to be made that you can find a seller on your own.

We recently spoke to thirty-year-old Richard Preston about how he bought his ideal business directly from the owner.

Preston is now the proud co-owner of NDT Equipment Supplies Limited, a company that specialises in supplying equipment for testing and inspection. It was a long and arduous journey, but it came with a highly rewarding outcome.

A story of passion and motivation

Preston’s entrepreneurial interests began long ago when he was met with an unexpected redundancy five years into a role at a large UK-wide logistics operator. It was then that he seized the opportunity to purchase his first business. Like many other business buyers, Preston used the services of a business broker.

However, in hindsight, he commented: “At the time, I used a third-party broker to do that and there were a lot of fees involved. Also, the deal wasn’t as perfect as I would have liked.”

Although personal circumstances forced Preston to move back into full-time employment soon after, he recalled the thrill of being a first-time buyer and owner, telling us that it drove him towards such ventures more than ever.

“Since then, I always had this urge and need to acquire and run my own business and it seemed to me that buying an established business was definitely the way forward, rather than trying to start one from scratch.”

There has been no looking back since Preston had his first taste of being a business owner. Despite returning to a full-time role with a food manufacturing company, Preston continued his hunt on the side, admitting to approaching more than 70 businesses for simple desk assessments but nothing ever came of it.

To help narrow down the search to businesses with an engineering focus, Preston partnered with Peter Dodd, engineer and friend. However they realised that they were making no headway despite the surge in encounters with sellers and brokers.

The underlying issue, they found, was that they were looking for a business with specific criterion. Plus they wanted to get a feel of the seller and his/her motivations. This just wasn't possible using a middleman. They had tried the broker route and it was clear to the entrepreneurs that their path lay in finding a business directly.

“You need to find a business for sale in the seller’s head, which is not necessarily the same as that of the brokers. With brokers, there is already a price tag attached to it and they’re normally more interested in making the quickest deal. Whereas with individual sellers, there are no mark-up fees or percentages taken off, so you can deal with the individuals themselves at the heart of the business rather than with a third party,” explained Preston.

Enter Business Sale Report

Some three years later without much success in finding what they were looking for, Preston and Dodd happened across the ‘Business Wanted’ section of Business Sale Report, a platform that allows buyers to advertise the type of businesses they are looking for, so owners and sellers can contact them directly.

For Preston and Dodd, the business wanted advert was a real “game changer” as it enabled them to start a conversation with business owners who were ready to sell and provided an avenue for sellers to get in touch with them directly.

The pair placed a detailed advertisement on the Business Sale Report website. The ad was very specific about the buyers' requirements and preferences, and before long the pair were contacted by the sellers of NDT Equipment Supplies Limited, who were ready to dive right into negotiations.

“There was certainly the will to do it from both parties.”

The process began with a desktop assessment and the transfer of two years’ worth of financial statements and accounts information for comprehensive examination. This was followed by due diligence, which traditionally involves an exhaustive valuation and assessment of the company. In the case of Preston and Dodd, however, due diligence was kept to a minimum.

“We were getting such a good opportunity, especially with the will to complete in such a quick time frame to suit both parties. It was a ‘sold-as-seen’ scenario, which is why we kept the due diligence so light.”

It seems when you know, you know.

Pending further negotiations between the two parties and getting a legal team involved, Preston and Dodd went to see the business in the flesh to carry out a final review and hash out the nitty-gritty. Within days contracts were signed, the sale agreed upon and it was handshakes all round.

“[The sellers] were so happy with our overall vision for the business, in that they knew we wanted to keep buying engineering firms to cover most capabilities in the engineering sector, and so they were happy to know that their business would be part of something bigger. It would also have more security and reliability in terms of the experience Peter and I bring, and they were quite sold with us as a group and what we were trying to achieve.”

Preston emphasised that there was a mutual agreement and understanding between themselves and the sellers in terms of the future of the business, which helped push the process along. Fundamentally, it was the willingness to negotiate from both sides that was identified as the key reason that the deal moved so quickly and smoothly.

A seamless transaction

From first meetings to signing the papers in the lawyers’ office, the whole sales transaction took just nine weeks - an incredibly speedy turnaround of events under any set of circumstances in the business world. In that time, Preston and Dodd went from being business buyers to brand new business owners.

“The steps were few and quick, and the whole deal was fantastically hassle-free.”

When asked if they would do anything differently, Preston insisted that he would keep conversations with other business vendors running, despite proceeding with negotiations with a seller.

“In order to grow, we need to keep a constant pipeline of conversations running. We don’t want to stop at engineering; we want to go through to logistics and manufacturing so there is scope and need for us to make great use of the platform.”

And with future plans of growing and scaling the business through acquisition after acquisition, Preston is certain that this venture is just the beginning. With long-term goals paving the way forward, the aim is to become an industry leader by encompassing a number of different capabilities in engineering all under one umbrella.

“I would say, try and connect with people who’ve already been through the process, because the guidance and direction they can provide you is priceless. On top of that, a trusted person who can provide you with financial and legal advice will go a long way.

“Use the internet to build and grow your networks. Use social platforms like LinkedIn and Twitter because it’s one of the easiest ways to connect with people and get messages and queries answered as quickly as possible,” says Preston, emphasising that networking is absolutely vital.

Success!

It is clear that Preston and Dodd’s journey was a small-scale, personalised business venture, with much potential to expand in due course. As such, having a broker limited the personalised aspect and interaction with sellers so they opted to contact owners directly.

Preston took the approach that each individual should be fully involved in the venture right at the very core. From finding the urge to be a business owner, to making the most of online platforms like the Business Sale Report to advertise your needs, then taking the negotiations forward through financial and desk assessments, due diligence and signing the contracts with legal teams, Preston’s journey was one that ensured he remained at the heart of the acquisition.

So for his purposes, the path with no middleman was an apt decision.

Preston’s final words of wisdom: “Deal with people directly. It is so much better.”

The future is looking up for Richard Preston and Peter Dodd, the proud new owners of NDT Equipment Supplies Ltd, who are looking to grow their business even further through acquisitions. Their aim is to venture into the logistics and manufacturing sectors to cover surface-engineering and fabrication to create a holistic business in all fields with all capabilities.

The success story of Richard Preston and Peter Dodd is an inspiration to those looking for a personalised business venture. A passion to acquire a business of interest supported by clear and concise criterion will indeed pave the way forward in finding common ground with your potential seller and ease along negotiations.


Interested in collaborating? List your business here or put forward a business wanted advert here and attract interested buyers and sellers directly.

To read more about selling and buying a business without a broker, have a look at our other articles:
- Do I need a broker to sell a business?
- Without a broker: contacting a business you want to buy

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