I recently got a call from two people writing a book about buying companies and doing it with no money down. They wanted me to help people that read their book, do exactly that. After talking to them I looked around on the web and found several (paid) ads selling this same system either through an online course or book.
To me this is the same old gimmick as the 'no money down' real estate schemes. I admit I have not bought any of these materials, but I believe my instincts that like any other get rich fast scheme, the vast majority of people never get these schemes to work and all they have done is lost time and money in the process. Here's some reasons why i question "no-money down" financing for buyouts and acquisitions.
1) 'No Money' doesn't mean "No-Money." When buying a business you have to pay attorneys, accountants, and banks (at a minimum)and maybe advisers too. They may defer fees until closing but if the deal doesn't close, someone (usually the buyer) has to pay those bills, which can be $25,000 to $100,000 depending on the size of the deal.
2) These deals often don't 'sit right' with sellers - Sellers that figure out they are selling to someone not putting any money into a deal are almost always likely to back out. What then do they need you for? Why wouldn't they just sell to management.
3) No one will lie awake at night - if the buyer has no significant money invested in the company, what is going to happen if the business starts to lose money or suffer a downturn. Banks and other financing sources, like to know that someone is not sleeping at night if its not working out.
4) Why not just sell to management - When you think of it from the seller's perspective, why does the seller need that buyer? What value does the buyer really provide? If the answer is 'some management experience,' if I were a seller I would stop immediately and sell to my company to management team.
So if you happen to be considering this and have no target acquisition already in mind, go on and think of another get rich scheme, like any Multi level marketing scheme, day trading or playing the lottery (which I do!).
If you happen to be someone that has found a company to buy and don't have the money to do it, dwell on Pt #4, and consider helping management (and yourself) do a management buyout. Instead of you becoming sole owner, you become a key part of the team that buys the company. In the end, your chances of success go up exponentially and everyone, including both the owner and the team you expect to run the business can do something everyone can feel good about.