Company Acquisition Instead of Start-Up: The Practical Guide for Aspiring Entrepreneurs

In our previous article, we explored the fundamental differences between starting a new business and acquiring an existing one. Many of our readers subsequently requested more detailed information on the practical steps involved in a business acquisition. Today, we are fulfilling that request.

Buying an established company is becoming increasingly popular for good reasons. By 2028, over 600,000 companies in Germany will be seeking succession – a tremendous opportunity for aspiring entrepreneurs who do not want to start from scratch. This article guides you step-by-step through the process of acquiring a business.

1. Self-Assessment: Are You Ready for an Acquisition?

Before you begin searching for a suitable company, you should honestly evaluate whether the path of buying a business truly fits you. We offer several tools to assist you:

Our article Can I Become an Entrepreneur? These Seven Questions helps you assess your fundamental suitability.
With Do I Have What It Takes to Buy a Business?, you can evaluate your specific skills for an acquisition.
What Makes a Successful Entrepreneur? provides further insights into the necessary qualities.

2. Securing Financing

One of the biggest hurdles in acquiring a business is financing. Unlike starting a new company, you generally need significantly more capital. The good news: there are numerous ways to obtain it:

Equity and Debt Financing

In our knowledge center, you will find extensive information on equity financing and debt financing. Particularly noteworthy are:

Bank Loans – the classic form of financing
Family & Friends – often an underestimated source
Business Angel Investments – if you want to bring external expertise on board

Mezzanine Capital as a Bridge

A particularly flexible form of financing is mezzanine capital, which combines elements of equity and debt. Two forms are especially relevant here:

Grants and Seller Financing

Don’t forget about government grant programs and the possibility of seller financing:

The KfW Entrepreneur Loan offers favorable terms
ERP Grants and regional economic development programs can significantly ease financing
A seller financing arrangement can substantially reduce your equity requirements, especially through seller loans or earn-out agreements

For those interested in the topic of "low equity," we have specialized articles:

3. The Business Search

Once you have basically secured your financing, the actual search begins. There are various approaches:

Business Search via Platforms and Networks

Business marketplaces are a good starting point – you should know their advantages and disadvantages
M&A advisors can help you find companies that are not publicly listed for sale – learn more in Using M&A Advisors for Buyers
For international buyers, we offer a special guide: Buy a Business in Germany: Beginner Guide

Search Funds as a Structured Approach

A particularly interesting model coming from the USA to Germany is Search Funds. They offer a structured approach to business search and acquisition:

Different Models of Search Funds
Capital Raising for Search Funds
Company Selection based on specific criteria

4. Due Diligence: Thoroughly Examining the Company

Once you have found an interesting company, the crucial phase of due diligence follows. Here, you carefully examine all aspects of the business to identify risks and determine a fair purchase price.

Types of Due Diligence

Depending on the industry and company size, different audits are important:

Financial Due Diligence – examination of financial figures
Legal Due Diligence – legal review
Commercial Due Diligence – assessment of market potential
Tax Due Diligence – tax review

Our Due Diligence Checklists help ensure you don’t overlook anything important.

Business Valuation

Valuing the company is a central part of due diligence. There are various methods:

DCF Method – for forward-looking valuations
Multiplier Method – for quick comparisons
Asset-Based Valuation – for asset-intensive companies

For a quick overview, we recommend our article Valuing a Business: Rule of Thumb.

5. Purchase Process and Negotiation

After successful due diligence, the concrete negotiation and closing of the purchase follow:

Negotiation Strategies

Negotiation Strategies for Buyers provides tips for successful price negotiations
Handling Different Price Expectations shows you how to bridge differences

Purchase Agreement and Protection

The Share Purchase Agreement is one of the most important documents in the purchase process
Enforcing Non-Compete Clauses protects you from unpleasant surprises after the acquisition

6. After the Purchase: Integration

The closing of the purchase is not the end but the beginning of your entrepreneurial activity. The integration of the acquired company is crucial for long-term success:

The First 100 Days

Our guides on the Post-Acquisition Phase assist you in getting off to a successful start:

The First 100 Days after the acquisition
Cultural Integration of the acquired company
Employee Management After Acquisition

Particularly valuable is our article Successfully Engaging Employees After a Business Acquisition.

Conclusion: Business Acquisition as an Attractive Alternative to Starting a Company

As our overview shows, buying an existing business offers numerous advantages over starting from scratch. You take over a functioning business model, a well-coordinated team, and existing customer relationships. The greater challenges lie in financing and successful integration.

Our Checklist for Business Acquisition summarizes all the important points clearly once again.

Do you have further questions about business acquisition? Or are you interested in specific industries such as IT companies or craft businesses? Contact us – we are happy to support you on your path to entrepreneurship through acquisition.