Business value is based on what a qualified buyer would pay in today’s market – and what a lender will finance. Most Main Street businesses are valued as a multiple of Seller’s Discretionary Earnings (SDE). Larger businesses are typically valued on EBITDA. Both methods look at the cash the business generates, but they’re used in different contexts depending on size and ownership structure.
Multiples vary by industry, revenue consistency, customer concentration, transferability, and growth trajectory. We provide a confidential Opinion of Value at no cost – this gives you a realistic range before you commit to anything.
These are the two most common methods for valuing a business based on its earnings, and which one applies depends primarily on the size of your business and your role in it.
SDE – Seller’s Discretionary Earnings – is used for most Main Street businesses where the owner is actively working in the business. It starts with net profit and adds back the owner’s salary, benefits, personal expenses run through the business, depreciation, amortization, interest, and any one-time or non-recurring costs. The idea is to show what the business truly puts in the owner’s pocket. Most businesses under $1M in annual earnings are valued on SDE.
EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization – is used for larger businesses that have management in place separate from the owner. It doesn’t add back an owner’s salary because a buyer would need to replace that role with a hired manager. Businesses valued above $1M in earnings typically shift to an EBITDA-based approach.
In both cases, the multiple applied to those earnings is driven by market conditions, industry, growth trend, and how transferable the business is without the current owner.
It can – and many owners are surprised. Years of hard work don’t always translate directly to market value. If your valuation comes in below expectations, that doesn’t mean you shouldn’t sell. It may mean timing, documentation, or a few operational improvements can meaningfully increase what buyers will pay.
We work with sellers whose valuations came in below expectations to develop a plan – whether that’s listing now at market price, making changes to improve value, or returning in 12-18 months. We’ll be honest with you about the options.
Confidentiality is one of the most critical parts of what we do – and we take it seriously at every stage.
Every prospective buyer signs a Non-Disclosure Agreement (NDA) before receiving any information about your business. Once signed, they receive your Confidential Information Memorandum (CIM) – a detailed document that describes the business opportunity without identifying you by name. In most cases, your business name is never in the CIM at all.
For niche businesses where even a description could identify you in a Google search, we are especially careful with the language we use – sometimes omitting details that would narrow it down to your specific operation.
Your business name typically isn’t disclosed until a buyer has had a qualifying conversation with our team and demonstrated they are both serious and financially capable. Some sellers prefer we hold that detail even longer. We follow your lead.
Listings are written to attract the right buyers without exposing who you are – and we control every step of what gets shared, and when.
Timelines vary. Some businesses sell faster – particularly well-priced listings in sought-after industries with clean, organized financials. Others take longer depending on lender requirements, lease negotiations, or a more limited buyer pool. Most sales fall somewhere in the 6 to 12 month range from listing to closing.
Factors in your control that affect timeline: pricing accurately from the start, having three years of organized financials ready, and being responsive during due diligence.
The more organized your documents, the smoother the process. Plan to have:
- 3 years of business tax returns
- 3 years of profit and loss statements (P&Ls)
- Current year-to-date financials
- A list of equipment and assets included in the sale
- Copies of any leases, contracts, or key supplier agreements
- An employee list with roles and tenure (names not required initially)
We help you organize and present this information in a way that supports your valuation and builds buyer confidence.
We charge a success-based commission paid at closing – we only get paid when you do. There is a modest upfront listing fee that covers preparation of your Confidential Information Memorandum (CIM), marketing materials, and listing costs. This is disclosed and agreed upon before we begin.
There are no hidden fees. Our commission is a percentage of the final sale price, and we’ll walk you through all the numbers before you sign a listing agreement.
Seller financing is common but not required. Many deals are structured as a mix of buyer equity, SBA lending, and seller financing. Offering some seller financing can make your business more attractive to a wider pool of buyers and sometimes results in a higher total sale price.
If you’re open to carrying a note, we’ll structure it with appropriate terms and protections. If you want an all-cash deal, we’ll focus on qualified buyers who can achieve that – though the buyer pool may be smaller.
In an asset sale, the buyer purchases specific assets of the business (equipment, customer lists, goodwill, inventory) but not the legal entity itself. This is the most common structure for Main Street businesses and generally preferred by buyers because they don’t inherit unknown liabilities.
In a stock sale, the buyer purchases the ownership shares of your company, including all assets and liabilities. Sellers sometimes prefer this for tax reasons. Your transaction attorney and CPA will help you determine which structure makes sense for your situation.
A transition period is standard in most business sales. The length and terms depend on the complexity of the business and what you and the buyer agree to. A typical Main Street business might include 2 to 4 weeks of transition support – enough for the buyer to understand daily operations, meet key vendors, and build confidence.
More complex businesses – especially those where the owner has deep technical or customer relationships – may involve a longer transition with compensation. This is negotiated as part of the deal, not assumed.
Most buyers want to retain employees – trained, experienced staff are a significant part of what they’re paying for. We work to position your team as an asset, not a liability, in the sale process.
Employees are typically not informed until very close to or at closing, to protect confidentiality and business stability. The buyer usually meets with key staff shortly after closing as part of the transition. Employment terms going forward are between the buyer and your employees.
It happens – sometimes financing falls through, due diligence reveals something unexpected, or a buyer simply changes course. Our listing agreement remains in effect and we go back to marketing the business.
We debrief on what happened, identify whether anything needs to be addressed, and bring in the next qualified buyer. The time and effort we put in on a failed deal is part of the service – not something you’re charged extra for.