5 Reasons People Choose to Buy an Existing Business

Buying an existing business can fast-track your path to ownership without having to start the business from scratch. 

But before you invest, it’s vital to understand why you’re making the purchase. Here are five common goals that drive entrepreneurs to acquire an existing company, and how each can shape your strategy.

1. Maximise Your Return on Investment

If your primary aim is to grow wealth quickly, buying a business at a reasonable price, boosting its profits, and then selling it off years later can deliver a powerful payday.

You look for companies that you can scale through marketing, cost savings, or expanded offerings, and aim to sell at a higher earnings multiple than you paid. In many cases, owners target a 5×10× return when they exit.

2. Secure Steady Cash Flow Today

Some buyers prioritise reliable income over long‑term growth. They acquire businesses, such as car washes, rental properties, or restaurant franchises, that already generate consistent profits.

Instead of reinvesting each year, they “milk” the cash flow, aiming for annual returns of 10–20% on their initial investment. This hands‑on approach can outperform passive investments such as stocks or bonds.

3. Build a Family Legacy

For many, owning a business is about more than money: it’s about passing something valuable to the next generation. Family‑owned enterprises often avoid outside investors so that control stays within the family.

Before buying, it’s important to discuss which businesses appeal to all potential successors, ensuring that children or relatives will want to take over when the time comes 

4. Create Passive Income with Minimal Effort

Not every acquisition requires your full attention. Some businesses “run themselves,” thanks to skilled managers or simple operations like vending‑machine routes or parking garages.

Buyers who want a low‑time commitment can find opportunities that need as little as 5 hours per week to oversee, turning them into genuine passive income streams 

5. Guarantee Yourself a Steady Paycheck

Occasionally, the goal is simply stable employment. If you struggle to find a suitable job, buying a sufficiently large company lets you set your own salary or take regular distributions.

if outside investors are involved, they may insist on an eventual sale, so consider whether you want to bring in partners before committing.