How to analyze a business before you buy it
The five steps that separate a real opportunity from a mirage: confirm the fit, verify the earnings, read the trends, scan for risk, and test the price against the debt.
The priceHow to value a small business you want to buy
SDE, multiples, and the lender math that decides what a price is worth. The three questions to ask in order, with a worked example.
The numbersWhat is SDE? Seller's discretionary earnings, explained
The number a small-business price is built on: what counts, what doesn't, how to calculate it, and how sellers pad it.
The numbersAdd-backs explained: how to tell legit from inflated
Every add-back moves the price by a multiple of itself. How to sort the legitimate ones from the wishful ones, with a worked example that moves an asking price $145K.
The risksRed flags when buying a small business
Nine warning signs that sink more deals than everything else combined. What each looks like up close, and when to reprice, restructure, or walk.
The conversationQuestions to ask a seller before making an offer
What to ask about the money, the customers, the team, and the real reason they're selling, and what a bad answer sounds like.
The numbersHow to read a small business's financials
What the tax returns, P&L, balance sheet, and bank statements each prove, and the one-month tie-out that catches numbers that don't hold up.
The numbersSDE vs EBITDA: which one matters when you're buying?
Same business, two different earnings numbers, two very different prices. How to tell which one a listing is quoting, with a worked example.
The numbersWhat's a fair multiple for a small business?
Survey data on SDE and EBITDA multiples by deal size, and the factors that move a multiple up or down.
The priceIs the asking price too high? How to tell
Three checks that tell you whether a price is fair or wishful thinking, with a worked HVAC example that fails on both the multiple and the lender math.
The priceBusiness valuation methods for buyers, explained simply
The market approach, the income approach, and the asset based approach, in plain English, with a worked example that runs all three on one deal.