Growth Through Acquisition: Why Buying Another Business May Be Your Smartest Move
When most small business owners think about growth, they picture landing new customers, opening a second location, or adding new product lines. These are all valid strategies, but they often take years of effort, trial and error, and significant upfront investment before they bear fruit.
There’s another, often overlooked, path to growth that can be faster, more profitable, and more strategic: buying another business.
Why Small Business Owners Rarely Think About Acquisitions
Most owners assume acquisitions are only for large corporations, private equity firms, or wealthy entrepreneurs. But the reality is that thousands of small and mid-sized businesses are bought and sold every year, often at price points that are accessible with the right financing.
The hesitation usually comes down to three misconceptions:
“It’s too expensive.” In reality, SBA loans and seller financing make acquisitions very achievable. Many deals close with 10–20% down, sometimes less if creative financing is used.
Broker Pro Tip: You may even be able to purchase a business for 0-5% down
“It’s too complicated.” While the process does involve due diligence and negotiations, it’s a clear step-by-step process when guided by a broker or advisor.
“I don’t know where to start.” Most owners never even consider competitors or complementary businesses as potential growth opportunities, even though they may be the fastest route to scale.
The Process of Buying Another Business
At first, the idea of buying another company may feel overwhelming. But when broken down, the process is straightforward:
1. Define Your Growth Goals
Before looking at opportunities, clarify your objectives. Are you aiming to:
Add customers quickly?
Expand into new geographic areas?
Acquire skilled employees and leadership talent?
Diversify into related products or services?
Increase recurring or contract-based revenue?
Your answers will shape the type of business you pursue.
2. Identify Target Businesses
There are three common categories to explore:
Competitors: Buying out a competitor can instantly increase market share.
Complementary Businesses: A plumbing company acquiring an HVAC business, or a CPA firm acquiring a payroll service, are common examples.
Geographic Expansion: Buying a similar company in a nearby city saves years of building a presence from scratch.
3. Valuation & Negotiation
Every business has a fair market value based on its earnings, assets, and market conditions. Brokers use industry multiples (such as multiples of Seller’s Discretionary Earnings or EBITDA) to determine a baseline. Negotiations then refine the final price, often involving terms like seller financing or performance-based earn-outs.
4. Financing the Deal
This is where many small business owners are surprised. You don’t always need millions in the bank to acquire another business. Common financing options include:
SBA 7(a) Loans (common for deals under $5 million)
Seller Financing (where the seller carries a portion of the purchase price over time)
Earn-outs (paying a portion of the purchase price based on future performance)
Investor Partnerships (partnering with an investor who provides capital in exchange for equity)
5. Due Diligence
Due diligence is essentially “trust but verify.” It involves reviewing:
Financial statements (3–5 years ideally)
Tax returns
Customer contracts
Employee agreements
Leases and vendor relationships
The goal is to ensure the business is as represented and that no hidden issues could affect its value.
6. Closing & Transition
Once financing and due diligence are complete, you’ll sign the purchase agreement and officially close. A well-planned transition ensures employees, customers, and vendors feel confident during the handover.
Why Growth Through Acquisition Works
There are several reasons this path to growth can often outperform organic expansion:
Immediate Market Share: Instead of slowly winning customers one at a time, you gain a book of business overnight.
Synergies and Cost Savings: Combining two companies can eliminate redundant expenses (think admin staff, marketing, rent).
Talent Acquisition: Skilled employees come with the business, helping you scale faster.
Geographic Expansion: Buying an established location allows you to enter new markets without the risks of a startup.
Diversification: By acquiring related businesses, you reduce risk and become less dependent on a single revenue stream.
Stronger Valuation: Larger businesses generally sell at higher valuation multiples. By growing through acquisition, you may not just add revenue—you may significantly increase the ultimate value of your company when you decide to sell.
A Realistic Example
Imagine you own a commercial landscaping company with $3 million in annual revenue. Growing organically might mean adding $500k per year through new contracts and marketing. That’s progress…..but it’s slow.
Now imagine you acquire a nearby competitor with $2 million in revenue. Overnight, your company becomes a $5 million operation. Not only does that double your size, but it also makes your business more attractive to future buyers. Larger companies often command multiples 1–2 turns higher than smaller ones. That means the acquisition doesn’t just grow your revenue, it multiplies your exit value.
A Mindset Shift for Small Business Owners
Most small business owners have spent years grinding to build their business one customer at a time. The idea of acquiring another company may feel “too big” or “not for me.” But in reality, this strategy may be the fastest way to scale your business and create long-term wealth.
Acquisition is not just for big corporations; it’s a tool that can work at every level of business ownership. The key is to approach it strategically, with the right advisors, financing, and a clear vision of how the acquisition fits your growth plan.
The Bottom Line
Growth through acquisition is one of the most powerful, yet underutilized, tools available to small and mid-sized business owners. If you’re serious about scaling, building value, and creating a company that could one day be sold for a higher multiple, acquisitions deserve a place on your radar.
If you’d like to explore whether buying another business is the right move for you, our team can help identify opportunities, structure deals, and guide you through the process from start to finish.