Total Cost to Acquire a Business

Cost of tools and time for high-level screen of possible businesses. Minimum $1000, often much higher. If you use a broker, this could be zero but you might want to invest in it anyway to keep the broker honest.

Consider $1500 and more

Fees for industry experts and others.

Time and cost to conduct a search for specific businesses and reduce it to a small number to pursue in detail. Consider $3000-$5000 unless you are using a broker in which case it would be zero.

Money to accompany the initial offer. Typically $15,000 to $25,000 for Main Street businesses, much higher for larger businesses.

Legal, CPA, and SME support during due diligence. Ranges depending on the complexity of the target businesses and the knowledge of the buyers. In a simple transaction this can be as low as $3000; but even a small business with issues can result in much higher fees while your team tries to figure it all out.

At-cost value of inventory to be transferred at closing. In a low-capital business this may be only perhaps $2000 and is often waived altogether.

Depending on the timing of the closing date vs. various invoices, the buyer or seller may owe each other pro-rate shares of invoices already paid or still to be paid. This varies greatly with each individual business and each deal. If unknown, assume $5000.

The change of ownership may generate taxable events at the local government level, particularly if vehicles are involved.

You need to retain enough cash reserves to cover a bad month or two or unexpected capital expenses and repairs. Early in the search cycle you may not know this number; consider holding 1-2 months REVENUE as the reserve.

When setting yourself up as a new customer, suppliers often require deposits. As a minimum you will have deposits with the utility companies.