Ask most business owners what they want to improve before selling, and they’ll tell you they want a higher multiple. It makes sense on the surface. If your business earns $400,000 in SDE and you can get a 3.5x multiple instead of a 3.0x, that’s $200,000 more in your pocket. Who wouldn’t want that? The […]
When a qualified buyer sits down with your three years of financials, they are not reading them the way your accountant reads them. They are not reading them the way you read them. They are reading them like a detective. They’re not looking for what’s there. They’re looking for what’s missing, what doesn’t reconcile, what […]
Your SDE statement is the most important financial document in your business sale. Not your tax return. Not your profit and loss statement. Not your balance sheet. Your SDE statement. It is the document that tells buyers, their lenders, and their advisors what your business actually earns — stripped of tax strategy, personal expenses, and […]
Two businesses. Same industry. Same revenue. Same EBITDA. Same owner. Same market. One sells for $2,400,000. The other sells for $1,600,000. What’s the difference? One has 60% recurring revenue. The other earns everything from one-time projects. That $800,000 gap — on identical earnings — is the recurring revenue premium. And it’s one of the most […]
You’ve spent years building a business. Revenue is strong. Margins are healthy. You’re ready to sell. Then your broker runs the customer analysis and finds it: one customer accounts for 38% of your revenue. Maybe two customers together account for 55%. Suddenly the conversation changes. The multiple you expected starts shrinking. Your broker starts talking […]
Here is a question that most business owners have never honestly answered: If you disappeared from your business tomorrow — not gradually, not with a transition plan, but completely and immediately — what would happen? For most small business owners, the honest answer is uncomfortable. Revenue would drop because key customers buy from you personally. […]
Every industry has a multiple range. In home services, it might be 2.5x–5.0x SDE. In manufacturing, 4.0x–7.0x EBITDA. In professional services, 3.0x–6.0x. The range is set by the market — by what buyers in aggregate are willing to pay for businesses in that sector. Where your business lands inside that range is set by you. […]
Most business owners think of financing as the buyer’s problem. The buyer needs to figure out how to fund the acquisition — through savings, an SBA loan, private equity, or some combination. The seller’s job is to pick the best offer and close. Financing is a buyer concern, not a seller strategy. That’s exactly backwards […]
Few deal structure components generate more seller anxiety — or more post-closing disputes — than the earnout. And for good reason. An earnout asks you to accept a fundamental bargain: we’ll pay you the full price you’re asking, but only if the business continues to perform at the level you’re claiming after you’ve handed it […]
The number on the LOI is not what you walk away with. This is one of the most important — and most consistently misunderstood — realities of selling a business. Sellers spend months focused on achieving a target enterprise value: $2M, $5M, $10M. They negotiate hard to reach that number. They celebrate when the LOI […]