The Back Door: You Don't Walk in the Front Door to Buy a Company

Everybody wants to buy a company the same way.

Call a broker and check the listings. Get in line with fifty other buyers. Bid against all of them.

That's the front door.

I've reviewed over 10,000 deals in my career. The good ones almost never came through it.

Why the front door is crowded

By the time a business hits a listing, everyone can see it. The price reflects that. So does the competition.

And the best companies? They're not listed at all, because the owner is busy running it. He's not thinking about selling until the right person shows up and makes it worth his time.

You don't find that deal. You build the relationship that makes it possible.

The wave that's coming

Here's what makes this the moment.

About 2.34 million U.S. businesses are owned by baby boomers, and they employ roughly 24.7 million people, according to research from the nonprofit Project Equity. Six in ten of those owners say they plan to sell within the next decade. A third of the ones who want to sell are already having trouble finding a buyer.

Most of those companies will never hit a listing. They'll go to someone the owner already knows and trusts.

The question is whether that someone is you.

Front door vs. back door

The front door is a transaction. The back door is a relationship.

Through the front door, you're one of fifty bidders. Through the back door, you might be the only call the owner takes.

How I work the back door

I'll keep this to principles. No names, no targets.

Know the operators, not just the companies. Great businesses run on great people. I pay attention to who is building something real, long before there's anything to buy.

Look for stalled teams. Some of the best opportunities aren't companies for sale. They're strong teams stuck inside a company that stopped growing. Those people want a leader worth following.

Show up before you need anything. I build relationships years before I'll ever ask. When the time comes, I'm not a stranger with a check. I'm someone they already trust.

Be the obvious call. When an owner starts thinking about what's next, I want my name to be the first one that comes to mind. That doesn't happen by accident. It happens by showing up, over and over, with the same standard.

This is how teams get built, too

Everything I just said about buying companies is true about building a team.

The best people aren't on job boards. They're working, a level down from where they'll be in five years, waiting for someone to notice. I wrote about how I find them in Resumes Lie. Standards Don't.

Same back door. Same rule. Build the relationship first.