Guides for people buying a business
Written for first-time buyers. No jargon left undefined, no advice that assumes you already know how this works.
Financials
What is SDE, and why does the seller’s number never match yours?
SDE is the number every small-business listing leads with, and the number buyers most often get wrong. Here is how it is built, what legitimately belongs in it, and why the seller’s figure and the documented figure so often differ.
Add-backs: how a $174,000 business gets advertised at $240,000
Add-backs are where small-business earnings get inflated. Which ones are legitimate, which are not, how to test each one, and what to do when a third of the stated earnings has no paperwork behind it.
Valuation
What businesses actually sell for: a plain guide to multiples
What an SDE multiple means, typical ranges by industry, what moves a business up or down inside its band, and why the multiple is usually the least interesting number in a valuation.
DSCR: the number that decides what you can actually pay
Debt-service coverage ratio determines how much a lender will finance for a business acquisition. How it is calculated, what threshold lenders require, and how to work backwards to your real price ceiling.