Inc.com’s Entrepreneur of the Year Ken Hendricks, the CEO and chairman of ABC Supply and #107 on Forbes magazine’s list of the 400 richest Americans, is said to “buy companies more often than most people buy toothpaste.” The Inc.com article pointed out that he seems to have a sixth sense when looking at financial statements and can immediately spot questionable numbers.

For us not gifted with such talent, here are his tips on how to buy a business:

1. Make the call — If you are going to buy a business, call the target yourself to demonstrate serious interest in the acquisition.
2. Find the why — There is always a reason why the owner is selling the business (and the owner may not always tell you the real reason) — e.g. they lost a major customer or lost their lease. Do your research “so you know when you’re walking into a dead horse.”
3. Gather the team — Get a fact finding team to look into the business and advice you with the acquisition (if you can afford to buy a business, surely you can afford to put together a team)
4. Look in the back — The employees can be a source of information that the owner/s may not freely give you
5. Draw the dream — After the acquisition, talk to the employees of the business you bought and let them in on your plan