John Crow 
Buying a business can be one of the smartest ways to become an entrepreneur. Instead of starting from scratch, you step into something that already has customers, employees, and revenue. For many people in Nashville, buying a business means less risk and faster growth than building one from the ground up.
That said, buying a business is not as simple as writing a check and getting the keys. It involves careful planning, financial review, and a stack of legal paperwork. This guide will walk you through the process of buying a business, what to expect at each stage, and how to protect yourself.
Why People Buy Businesses
Entrepreneurs choose to buy businesses for many different reasons. Some of the most common include:
- Immediate income from day one
- An existing customer base and reputation
- Trained employees and management in place
- Established vendor and supplier relationships
- Easier financing, since banks and investors prefer proven businesses
In Nashville, buyers are often attracted to local service companies, restaurants, healthcare practices, and professional services because of the city’s rapid growth and strong demand.
Step 1: Decide What Kind of Business You Want
Before you begin the search, decide what type of business makes sense for your skills, interests, and goals. Ask yourself:
- Do you want something you can run day-to-day, or an investment with managers in place?
- Do you want a small, family-owned business, or a larger company?
- Do you want to be in a familiar industry, or explore something new?
Think about your strengths. If you love sales and networking, a business that relies on customer relationships could be a good fit. If you prefer operations, look for a company with steady systems and contracts.
Step 2: Search for Opportunities
There are several ways to find businesses for sale in Nashville.
- Business brokers who list businesses and connect buyers with sellers
- Attorneys and accountants who know owners looking to sell
- Online marketplaces with listings of small businesses
- Networking in your industry which can uncover off market opportunities
Sometimes, the best businesses are not formally listed. Reaching out directly to owners you admire can lead to conversations about succession or retirement.
Step 3: Review the Initial Information
Once you find a business that looks interesting, you will usually receive a short summary called a teaser or information packet. After signing a confidentiality agreement, you may be given more detailed information such as:
- Basic financials, such as revenue and profit
- A description of the business and its operations
- A summary of employees and management
- General terms of the sale
This stage helps you decide if it is worth investing more time.
Step 4: Understand the Valuation
Every business has a value, but how that value is calculated depends on the industry, size, and financial performance. Common valuation methods include:
- Earnings multiples where the price is based on a multiple of profits
- Asset based valuation focusing on equipment, property, or inventory
- Market comparisons where similar sales are used to judge price
Do not assume the asking price is fair. Always compare it to industry standards and talk with your accountant about what is realistic.
Step 5: Make an Offer with a Letter of Intent
If you decide to move forward, the first formal step is usually a Letter of Intent. This document outlines the basic terms before you dive into full due diligence. An LOI usually includes:
- The purchase price, and how it will be paid
- Whether you are buying assets or the company itself
- A timeline for due diligence and closing
- An exclusivity period where the seller cannot talk to other buyers
The LOI is not the final contract, but it sets the framework for negotiations.
Step 6: Conduct Due Diligence
This stage is where you investigate the business in detail. You want to confirm that what the seller has told you is accurate and complete.
Financial due diligence may include:
- Reviewing tax returns for several years
- Analyzing profit and loss statements
- Looking at cash flow and debts
- Confirming customer payments and vendor balances
Legal due diligence may include:
- Reviewing contracts with customers and suppliers
- Checking employment agreements and benefit plans
- Reviewing leases and property records
- Making sure licenses and permits are valid
- Checking for lawsuits or pending claims
Operational due diligence may include:
- Reviewing how customers are acquired and retained
- Assessing employee performance and turnover
- Evaluating technology and systems
This is also the stage where you work with a lawyer to identify risks. If problems are discovered, you can either walk away or renegotiate.
Step 7: Secure Financing
Most buyers do not pay all cash for a business. There are several ways to finance a purchase:
- Bank loans, often through the Small Business Administration
- Seller financing where the seller allows you to pay part of the price over time
- Private investors or partners who provide capital in exchange for ownership
Nashville banks are familiar with small business transactions, and SBA loans are fairly common. Be prepared to provide financial statements, credit reports, and sometimes collateral.
Step 8: Negotiate the Purchase Agreement
Once due diligence is complete and financing is arranged, the attorneys draft a Purchase Agreement. This is the binding contract that finalizes the sale. It will cover:
- The purchase price and payment terms
- What assets or shares are included in the sale
- The seller’s promises about the business, called representations and warranties
- Indemnification, which determines who pays if problems come up later
- Non-compete or non-solicit agreements that protect you from the seller competing against you
- Closing conditions, such as landlord or vendor approvals
This agreement is complex, so it is critical to have an experienced attorney review every detail.
Step 9: Prepare for Closing
The closing process is where ownership officially changes hands. Paperwork may include:
- Bill of Sale that transfers physical assets
- Assignment of contracts with customers or vendors
- Lease assignment, if the business rents space
- Employment agreements for key staff or the seller
- Closing statement showing how funds are distributed
- Secretary of State filings in Tennessee, if required
- Final tax filings for the seller, such as a sales tax return
As the buyer, you want to make sure every necessary document is signed and filed.
Step 10: Transition Smoothly
Buying a business does not end at closing. A good transition plan can make or break your success. Consider:
- Whether the seller will stay on for a period of time to train you
- How and when you will introduce yourself to employees and customers
- Whether to keep existing systems in place before making changes
Many Nashville deals include the seller staying involved for three to six months to help with introductions and training.
Example 1: Buying a Local HVAC Company
Mike wants to buy a heating and air company in Nashville. The seller provides three years of tax returns, equipment lists, and customer contracts. Mike signs a Letter of Intent and conducts due diligence. He discovers that several vendor contracts require approval, so his attorney negotiates assignments. The Purchase Agreement includes a five-year non-compete clause. At closing, Mike signs the Bill of Sale, assignments, and lease transfer, and begins operations.
Example 2: Buying a Coffee Shop
Sara has always wanted to own a coffee shop. She finds one in East Nashville with loyal customers and steady revenue. After reviewing financials and signing an LOI, she learns during due diligence that the lease will expire in one year. She negotiates a lower price and requires the seller to extend the lease before closing. The transition is smooth, with the seller introducing her to vendors and staff.
Example 3: Buying an E-Commerce Business
David wants to buy an online store selling home goods. The seller provides website traffic data, vendor contracts, and intellectual property records. David’s lawyer ensures that trademarks and domain names are transferred. At closing, the Purchase Agreement includes IP assignment agreements and non-solicit clauses. David takes over with minimal disruption because the systems are intact.
Common Mistakes When Buying a Business
- Not doing thorough due diligence and missing hidden debts or problems
- Paying too much because of excitement
- Failing to secure financing early
- Overlooking employee issues such as turnover or unpaid benefits
- Not involving an attorney and accountant from the start
Final Thoughts
Buying a business is one of the most rewarding ways to become an entrepreneur. Nashville offers countless opportunities across industries, from restaurants to healthcare companies to professional services. The process requires patience, paperwork, and guidance, but the result can be a thriving business that gives you income and freedom from day one.
Ready to Buy a Business in Nashville?
At Crow Estate Planning & Probate, PLC, we guide entrepreneurs through every step of buying a business. From reviewing financials and negotiating contracts to filing Tennessee paperwork and closing the deal, we make sure you are protected and prepared.
If you are considering buying a business in Nashville, contact us today to schedule a consultation.
About the Author
John Crow is the founder, owner, and principal attorney of Crow Estate Planning and Probate, PLC. With over a decade of legal experience in the areas of estate planning, probate, conservatorships, guardianships, and business planning, he serves clients in the greater middle Tennessee and southern Kentucky regions. He obtained his Bachelor of Arts degree in History from Vanderbilt University, then later received his Juris Doctorate from the Cumberland School of Law at Samford University. He is a lifelong Clarksville resident and is honored to have helped so many families over the years. Learn More.
Licensed in Tennessee and Kentucky