One of the big questions I get asked is how do I find a business to buy? 

Well, of course, there's a lot to that question. Evaluating a company for acquisition can be a daunting task. It is important to do the research and gather the information you will need to make a well informed decision and there are a number of components to that.

In this article, I’m going to drill down on the strategy you can use to identify business acquisition targets. Getting this right up front will save you a lot of time down the road.

How to identify your business acquisition targets

Here’s a framework you might want to consider: 

Firstly, think about businesses in your vertical industry chain. 

These are people who supply to you, or perhaps people who you sell to. If you can move up and down your vertical industry chain and find a business to buy, this allows you to capture more margin. 

Secondly, consider your competitors.

Perhaps there are some people out there who compete across certain services or different products. When it comes to acquiring a business, what factors make a good complementary fit to your business? 

Thirdly, start to think almost three dimensional. 

There are businesses out there who have a complementary perspective to you. Maybe you sell tables and they sell chairs. You don't compete, as you don't buy and sell from each other but there's just some synergy there, right? 

You need to think about your own business and who's who in the market that could add that layer of strategic value to your business.

What comes next in a company acquisition?

Once you have identified your acquisition targets you've got to go through all the other mechanical and logistical stuff such as, what can you afford to actually invest in? Where do these people operate geographically? What are the other complementary measures that are important to you and your business? 

After that, it's about mapping the market. And there's a variety of tools that you can use to find those kinds of companies.

Once that’s done it’s time to engage your targets and finally negotiate the deal.

A business acquisition can really accelerate your growth but you need to get your strategy right.

Buying a business can be a complex process. However, if you start on the right foot with a good strategy to identify your acquisition targets you will have a clear vision to move forward.

Good luck.