Learn how to buy a small business in India
The complete guide to acquiring profitable businesses. Valuation, due diligence, financing, and finding deals — all in one place.
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Key Insight
India has over 63 million SMBs but fewer than 20 PE firms focused on small business acquisitions. This creates massive opportunity for individual buyers — businesses sell for 2-4x profit vs. 4-6x in the US.
Why buy an existing business?
Buying an existing business eliminates the riskiest phase of entrepreneurship—the startup years. You inherit customers, revenue, trained staff, and operational systems that took years to build.
| Path | Time to Profitability | Capital at Risk | Success Rate |
|---|---|---|---|
| Start from scratch | 2-5 years | High (₹20-50 lakh+) | ~10% survive 5 years |
| Buy existing business | Day 1 | Moderate (tied to assets) | ~70% still operating after 5 years |
Start with the fundamentals
Everything you need to know about buying a business in India
How to Buy a Business in India
Step-by-step guide from finding deals to closing.
How to Value a Small Business
Valuation methods, multiples, and what affects price.
Due Diligence Checklist
What to check before you buy any business.
Financing Your Acquisition
Loans, seller financing, and creative structures.
What types of businesses can you buy?
Small businesses across every sector are available for acquisition in India, from manufacturing units to e-commerce stores.
| Business Type | Typical Price Range | Annual Profit Range |
|---|---|---|
| Retail/Kirana Store | ₹5-30 lakh | ₹3-12 lakh |
| Restaurant/Café | ₹15-75 lakh | ₹5-25 lakh |
| Manufacturing Unit | ₹50 lakh - ₹10 crore | ₹15 lakh - ₹2 crore |
| Service Business | ₹10-50 lakh | ₹5-20 lakh |
| E-commerce/D2C | ₹20 lakh - ₹3 crore | ₹8-60 lakh |
| SaaS/Digital | ₹15 lakh - ₹5 crore | ₹5 lakh - ₹1 crore |
Frequently asked questions
Is buying a business a good investment in India?
Buying a profitable business can be an excellent investment, often yielding 25-40% cash-on-cash returns compared to 10-15% from real estate or stocks. When you acquire a business at 2.5-3x annual profit and maintain that profitability, you're effectively earning 33-40% annually on your investment. The key is buying at the right price and ensuring the business can operate without excessive owner involvement. Businesses with strong systems, loyal customers, and capable employees make the best investments. However, like any investment, returns depend on execution—poorly managed acquisitions can destroy value quickly.
How long does it take to buy a business in India?
A typical business acquisition in India takes 4-9 months from starting your search to closing the deal. The timeline breaks down roughly as: search and screening (2-4 months), due diligence (4-8 weeks), negotiation and documentation (4-8 weeks), and closing (1-2 weeks). Well-prepared businesses with clean financials can close faster—sometimes in 3 months. Complicated deals with multiple stakeholders, real estate transfers, or regulatory approvals can take 12+ months. The biggest time variable is finding the right opportunity that matches your criteria.
Can NRIs buy businesses in India?
Yes, NRIs can acquire businesses in India under RBI's automatic route for most sectors, though some industries require specific approvals. NRIs can invest in Indian companies through the Foreign Direct Investment (FDI) route or Portfolio Investment Scheme (PIS). For direct acquisition of partnership firms or proprietorships, the process requires RBI approval. Most NRI buyers structure acquisitions through private limited companies. Key considerations include repatriation rules, FEMA compliance, and tax implications in both India and your country of residence. Consult a CA with cross-border experience before proceeding.
What are the risks of buying an existing business?
The main risks include overpaying, inheriting hidden liabilities, customer concentration, and owner dependency. Overpaying is the most common mistake—always value based on verified financials, not seller claims. Hidden liabilities can include unpaid taxes, pending lawsuits, or undisclosed debts. Customer concentration risk exists when a large percentage of revenue comes from few customers who may leave after ownership changes. Owner dependency means the business relies heavily on the current owner's relationships or skills. Thorough due diligence mitigates most risks—never skip this step to save time or money.
Do I need a lawyer to buy a business?
Yes, always engage a lawyer experienced in M&A transactions for any business acquisition above ₹10 lakh. The lawyer drafts or reviews the purchase agreement, ensures proper transfer of assets and licenses, conducts legal due diligence, and protects you from hidden liabilities. Legal fees typically run 1-2% of deal value for small transactions (₹25-50 lakh) and 0.5-1% for larger deals. This is not the place to cut costs—a well-drafted agreement with proper representations, warranties, and indemnities can save you lakhs in future disputes.
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