Buying a Business in Alaska

This guide is written for the bold individual buyers who are ready to jumpstart their entrepreneurial journey through buying their first business. Maybe you want more control over your destiny; perhaps you are attracted to the lifestyle of the business owner; or possibly you want to build wealth or leave a legacy.

Whatever brought you to this point, you are probably looking at businesses valued around $1 million, more or less. You likely have not started or bought a business before, so this is exciting. And intimidating.

It most likely feels like an “all chips in” kind of decision. And maybe that’s what it would take.

The Paradox of Business Acquisition

Buying a business is one of the best ways to achieve personal financial freedom and build wealth. It’s very rare to find someone who has both freedom and wealth who hasn’t either built or bought a business.

According to McKinsey & Company, 60 percent of business acquisitions fail to return value. This estimate includes M&As masterminded by the Fortune 500 “bigs” with armies of brilliant people. Keep that in mind.

However, that 60 percent failure rate isn’t Las Vegas odds. It’s a reflection of how often buyers rush the process. They skip asking the right questions. They gloss over unfamiliar topics. They get caught up in the sparkle and excitement of the acquisition.

No one is immune to this. My partner and I got sucked into it for a while. The bigs do as well.

The truth is, the deal’s sparkle can blind you. You see the numbers, the location, the reputation—but real questions can get overlooked. What does the business actually need to succeed without its current owner? How sustainable are its margins? How prepared are you to step in and not just own it but run.

Start with the Right Target

Most first-time buyers don’t define in advance the kind of business they want to buy or what it needs to accomplish for them. In fact, I’ve seen billion-dollar companies with entire M&A teams that also can’t answer that question. As a result, many of their acquisitions fail. It’s not because they lack experience; it’s because the urge to act often overrides the discipline to plan.

This exercise—defining your target with specific acquisition criteria—provides an objective filter that lets you quickly recognize good fits and quickly walk away from bad ones. It’s more than just identifying opportunities. When you know what you want and why, you’re far better prepared to negotiate the right terms, which often matter more than price, and then structure the deal to your advantage.

This was the fundamental error my partner and I made. He had already expressed interest and put momentum behind the deal before I came on board. He was a regular customer of the business and simply liked it. That personal familiarity gave him a sense of comfort, but it also bred tunnel vision.

By the time I got involved, inertia was at play. However, I also got caught up in the idea of the business and could see its potential for growth. We weren’t evaluating the business objectively; we were trying to make it fit our expectations.

How to Define the Target

Before browsing on BizBuySell or whatever, answer this basic question: do I want to buy a business or do I want to buy a job?

Some buyers want to buy a business purely as an investment. They don’t want to be behind the counter or on-site every day—they want to oversee operations, not drive them. Others are buying a job. They want to be on the front lines—running the business, building relationships, and being deeply involved in day-to-day decisions.

If you want to own a business and not have a job in the field or behind the counter, your options are significantly narrower. Very few small businesses are designed to operate without the owner’s daily involvement. But they do exist. These “turnkey” operations are typically well-structured, have solid models, and are priced accordingly.

On the flip side, if you’re looking to buy a job, your range of options expands. It might be priced attractively, but it will demand your time, energy, and resources to make it work. The key is accurately estimating what that effort will cost you and ensuring that it’ll be worth it.

If you are very familiar with an industry, you can buy a job and turn it into a full business. This is a very profitable strategy, but it’s difficult to pull off. I only recommend this to people who have experience leading business turnarounds.

This last scenario is what my partner and I were looking at: a fixer-upper that we thought we’d be able to fix up to run on its own. It was positioned and priced as a turnkey business, but unfortunately we recognized that, while the business had “good bones,” the updates and repair it needed were more than the benefit it could provide.

Other Questions to Consider

A potential buyer should answer a few more questions before defining the target of an acquisition.

• Revenue & Profit Expectations: This is the most obvious filter. What’s the revenue range you’re looking for? More importantly, what profit range makes it worthwhile? I’m a firm believer that buying a business should improve your life, not make it harder. Make sure you know the upside that you need.
  Size & Complexity: What level of complexity (staff, customers, departments, et cetera) are you comfortable managing?
• Industry Knowledge: What industries do you understand best? Where are you most likely to thrive?
• Staffing Realities: Post-acquisition turnover is nearly guaranteed. How difficult will it be to find reliable staff in that location?
• Location: Where does this business need to be located for it to work for you? Even if you’re buying a business, not a job, expect you’ll need to spend a lot of time there, at least at the beginning. Thus, make sure the location makes sense.
• Your Role: Are you running it daily, managing it from a distance, or overseeing it at a high level? Is the business already structured to support the role that you want?

Remember, you’re not just buying a business; you’re buying a job, a team, and a lifestyle. If you don’t buy well, all you’ve acquired is a liability. Or worse—a job plus a liability.

Target Defined. Now What?

Some of the easiest places to find a small business are to talk to a local business broker or search listings on <a href = “https://www.bizbuysell.com/”>BizBuySell.com</a>, <a href = “https://www.villagewellth.com/”>VillageWellth.com</a>, or similar websites, which are a great resources for businesses valued around $5 million or lower.

If you are interested in larger businesses, you’ll most likely need to start exploring the hidden business market in Alaska.

Because Alaska is a small, tight-knit community where many people know each other, sellers often don’t want to let the secret slip that they are thinking about selling. Instead, they find confidential ways to go about finding buyers. This creates a hidden market of businesses potentially available but not publicly listed. Here are several ways to approach it.

Many sellers have vague thoughts about selling but aren’t actively pursuing it. You can approach them directly with something like, “I’ve always been interested in owning a business like yours. I’m curious if you’ve ever considered selling. If so, would you be open to talking about what that might look like?”

I’m working with an owner who was approached by an interested buyer. The owner was interested but wasn’t ready to sell, so the potential buyer moved on. However, this got the owner thinking. They decided that they’d like to be ready to accept the next good offer, and they reached out to me to help them. We’ve been working to raise the value and readiness of the business to sell. They are planning on going to market this year.

Don’t feel awkward about asking. It is a compliment. Just be prepared for the fact that the owner may be unprepared for the conversation. But this doesn’t mean they aren’t flattered and interested.

Additionally, get to know the people who already know the sellers you are looking for. Connect with CPAs, financial planners who work with high-net-worth clients, bankers, and attorneys who handle business matters. Meet with M&A advisors and business consultants.

If you don’t know people in these professions, don’t be shy. They are approachable and often confide in me that they wish people would talk to them much earlier in their process, as opposed to later. None are likely to charge you for this conversation. All you need to do is let them know you are interested in buying and ask if they have business owner clients looking to sell (or approaching retirement age) who fit your target profile.

Assemble Your Advisory Team

Most buyers wander into avoidable problems because they didn’t have good, timely advice. Even experienced buyers get caught up in the emotion and excitement of the deal and miss obvious things. Good advisors are critical for helping you navigate this.

If you don’t have advisors in place, you can begin searching for them while you search for businesses to buy. The conversation I described above is a great way to get to know different kinds of advisors and decide who you want to work with.

Engage with these professionals early, when you’ve decided you want to buy but before you’ve identified a business to buy. They can help avoid many mistakes. Here’s who you’ll likely need:

• M&A advisor or broker
• Transaction attorney
• CPA familiar with small business M&A
• Banker or financing advisor
• Business performance coach or strategic advisor

Don’t feel shy about meeting with these folks to put the relationships in place. Most of them would welcome an introduction and won’t charge you for it. The best advisors do more than respond to your questions. They recognize your experience gaps and prepare you for long-term success.

You Found a Business. What Next?

The typical acquisition process follows the following steps. Your advisory team can help you navigate them well:

1. Find an opportunity as mentioned above.
2. Sign a Non-Disclosure Agreement to receive more detailed and confidential information about the business.
3. Submit a Letter of Intent if you’re seriously interested. This document outlines price expectations, terms for due diligence, and high-level deal structure. Typically, the seller agrees to take the business off the market for thirty to sixty days during the due diligence process.
4. Conduct due diligence with a deep dive into financials, contracts, operations, and key dependencies.
5. Sign a Purchase and Sales Agreement that locks in the terms of the sale.
6. Post-sale transition such as knowledge transfer, introduction to key staff and clients, and operational handoff.

In some cases, the seller and possibly even your broker will be focused on completing the transaction quickly. As a result, you might rush past addressing critical categories to examine that are key to a profitable and enjoyable acquisition.

Be warned, the devil lives in these due diligence details:

• Cultural fit
• Financial performance and statements
• Legal issues
• Operational dynamics
• Market conditions
• Technology/IT
• Strategic fit
• Tax implications
• Environmental and regulatory compliance
• Post-sale transition planning

Most importantly, determine what’s really working—and what only works because of the owner. Roughly 80 percent of small businesses are dependent on the seller to operate. You want a clear understanding of what to expect and ensure there’s a fit between reality and your goals.

Ready to Take the Opportunity?

Buying a business in Alaska isn’t for everyone, but the rewards can be transformative. If you approach the acquisition process with a clear target, use disciplined due diligence, and are supported by a good team, you set yourself up for success.

Most of all, you need to be prepared for the reality that buying a business means buying into a lifestyle. You’re stepping into the rhythm of that company, the way it operates, its relationships, and the customers it serves.

If you choose well, you’re not just buying a business, you’re securing your financial future and becoming a key part of Alaska’s economy and story.

The opportunities are there. The wave of retirements among Alaska’s business owners is creating openings that are historically unique. The question isn’t whether there are businesses to buy—it’s whether you’re ready to take that step and turn opportunity into ownership.