Where to find a biz to buy

Internet databases can get you off to a good start, but be prepared to hire someone to help to narrow your search.

Tyler Lowe, St. Louis
I would like to buy or become a controlling partner in a small/medium size business in the St. Louis area. How do I find businesses that are either for sale, or that have owners who would be willing to discuss a sale? My broker (with a huge financial services firm) has not been able to generate many leads.

By Lenora Chu, Fortune Small Business contributor
Dear Tyler: First, you'll need specify what kind of business you'd like to purchase. You're likely to be more successful if you target an industry where you already have knowledge and expertise, say the experts.

"If doesn't matter how much money a person has or how smart they are, there will always be a learning curve," says Terry Monroe, president of the St. Louis-based brokerage firm American Business Brokers.

Starting somewhere familiar will help. And being very specific will help you narrow your search.

You could start compiling a target list by consulting an online database such as BizBuySell.com or BizQuest.com, says Mark Pittman, managing director at the Los Angeles-based investment bank Grandview National Inc.

These sites list more than 50,000 businesses for sale, and searches can be filtered by industry, state, county and city.

You can also research and target businesses that are not on the market and approach the owner directly, Pittman says. Should the owner be interested in selling, you may be able to negotiate a deal without competing with other buyers. Trade associations can help you identify specific businesses within an industry. Or try consulting Dunn & Bradstreet's database of business records.

If you employ a broker to help you, you should use a firm that focuses solely on buying and selling businesses, says Monroe. They will know what's available in your market and be able to perform searches according to your criteria.

However, Pittman warns that you should be wary of brokers who show buyers only businesses they already represent.

One high-end option: Consider also hiring an investment bank that specializes in the industry you're interested in. Although it's generally only cost effective to hire investment banks if you're buying a business in the $10 million an up range, a number handle deals as low as the $1 million mark, Pittman says. Like brokers, investment banks will handle the work of contacting potential sellers for you.