Beyond the Asking Price

PART 1

Start With Fit, Not Listings

 

Many buyers begin by browsing listings. A better starting point is a clear picture of what you want ownership to look like. Two businesses with the same price can lead to very different lives.

Questions to answer before you search

•  Role. Do you want to work in the business every day, manage a team, or eventually hire a manager?

•  Hours and schedule. Can you commit to evenings, weekends, or seasonal peaks?

•  Skills. Which of your strengths, such as sales, operations, finance, or a trade, transfer directly?

•  Licensing. Does the work require licenses or certifications you hold or can obtain?

•  Capital. How much cash can you invest while keeping a reserve for working capital and surprises?

•  Income needs. What do you need to earn in the first year, after the business pays its obligations?

•  Risk tolerance. Are you comfortable with customer concentration, seasonality, or dependence on a few key employees?

•  Location. How far are you willing to travel, and does the business depend on its current site?

 

Write it down. A one-page summary of your criteria, covering industry, size, location, role, and budget, makes conversations with brokers and lenders far more productive and helps you say no to poor fits quickly.

 

 

PART 2

Revenue Is Not Owner Earnings

 

Revenue shows how much money comes in. It does not show how much is left for an owner after the business pays for inventory, staff, rent, and everything else. Two businesses with identical revenue can produce very different owner income.

Seller’s discretionary earnings (SDE)

For owner-operated small businesses, buyers and brokers commonly look at seller’s discretionary earnings. SDE starts with pre-tax profit and adds back items a new owner would not necessarily incur: one owner’s salary and benefits, interest, depreciation and amortization, and documented one-time or non-business expenses. Larger companies are more often evaluated using EBITDA, which does not add back owner compensation.

A simplified, hypothetical example

•  Annual revenue: $700,000

•  Pre-tax net profit (per tax return): $90,000

•  + One owner’s salary and payroll taxes: $60,000

•  + Depreciation (non-cash): $15,000

•  + Interest on the seller’s existing debt: $8,000

•  + Documented one-time repair: $7,000

•  = Seller’s discretionary earnings: $180,000, before your own debt payments and replacement costs

 

This example is for illustration only and does not describe any real business.

 

What SDE does not tell you

•  Your actual take-home. From SDE you still pay any acquisition debt, and you may need to replace equipment or hire help for work the seller did personally.

•  Whether add-backs are real. Every adjustment should be supported by records. Be cautious with large or vague add-backs.

•  Trends. One strong year is less informative than several years of consistent results.

•  Owner effort. SDE assumes one full-time owner. If the seller worked 70 hours a week, the earnings reflect that effort.

 

Owner draws are not automatic add-backs. Money an owner withdrew from the business is not the same as an expense that can be added back. Ask how each adjustment was calculated, and have your accountant review the financials.

 

 

PART 3

Market Snapshot: Q2 2026

 

BizBuySell, an online business-for-sale marketplace, publishes quarterly figures based on transactions reported by participating business brokers. The national U.S. results for the second quarter of 2026 (April through June) were:

•  Businesses reported sold: 2,117 (down 10% from both Q1 2026 and Q2 2025)

•  Median sale price: $349,250 (down 1% year over year)

•  Median revenue: $692,087 (down 3% year over year)

•  Median cash flow: $155,921 (down 3% year over year)

•  Average cash-flow multiple: 2.7 (up 2% year over year)

 

Source: BizBuySell Insight Report, Q2 2026. Figures reflect transactions reported to BizBuySell nationally and may not represent every sale or any local market.

 

How to read these numbers

•  Medians describe the middle of reported deals, not what any particular business is worth.

•  A cash-flow multiple is a ratio between sale price and cash flow. It varies with industry, size, trends, risk, and deal terms, and should not be used on its own to price a business.

•  National results can differ from conditions in Nebraska and the surrounding region.

 

What buyers told BizBuySell

•  78% of surveyed buyers said they expect to use SBA financing to complete an acquisition.

•  90% of buyers said they expect seller financing to be part of their strategy, while only 29% of business owners said they plan to offer it.

•  86% of buyers said they are seeking recession-resistant businesses.

 

Source: BizBuySell Insight Report, Q2 2026 buyer and seller surveys.

 

PART 4

Business Categories and Ownership Demands

 

Every category carries its own rhythm, risks, and skills. The examples below are general and are not listings or recommendations. Median sale prices are national BizBuySell figures for Q2 2026, included only for context.

Service businesses

Q2 2026 national median sale price: $350,000. Service businesses made up about 40% of reported transactions.

•  Examples: cleaning, pest control, landscaping, HVAC, plumbing, staffing, and professional services.

•  Revenue often depends on recurring customers, contracts, and the reputation of key technicians.

•  Ask about licensing, employee retention, scheduling systems, and how customers are acquired.

•  Owner demands vary widely, from hands-on field work to managing crews and estimates.

 

Retail

Q2 2026 national median sale price: $250,000.

•  Examples: specialty stores, nutrition and wellness shops, hardware, and gift retail.

•  Inventory is often sold separately or adjusted at closing; understand how it is counted and valued.

•  Lease terms, foot traffic, and competition from online sellers deserve close review.

•  Expect retail hours, staffing on weekends and holidays, and seasonal swings.

 

Restaurants and food service

Q2 2026 national median sale price: $205,000.

•  Examples: cafes, quick-service franchises, full-service restaurants, and catering.

•  Margins can be thin; food and labor costs and the lease are critical.

•  Health permits, liquor licenses, and franchise approval may not transfer automatically.

•  Often among the most time-intensive businesses for an owner-operator.

 

Manufacturing and light industrial

Q2 2026 national median sale price: $704,500. BizBuySell reported 247 days to close for this sector.

•  Examples: fabrication, machine shops, specialty production, and packaging.

•  Equipment condition, skilled labor, and customer concentration are key diligence items.

•  Larger deal sizes often mean more complex financing and longer timelines.

•  Owner role is frequently focused on sales, quoting, and operations management.

 

Franchise resales

•  Buying an existing franchise location usually requires franchisor approval and training.

•  Review the franchise agreement, remaining term, transfer fees, and required upgrades.

•  Royalties and marketing fees reduce owner earnings; confirm they are reflected in the financials.

 

 

PART 5

Financing Basics

 

Most small business acquisitions combine several sources of funding. Understanding the basics early helps you set a realistic budget and talk productively with lenders.

Common funding sources

•  Buyer equity: your own cash, which lenders generally require.

•  SBA 7(a) loans: bank loans partially guaranteed by the U.S. Small Business Administration and frequently used for acquisitions.

•  Seller financing: a note in which the seller is repaid over time. Terms are negotiated and not always available.

•  Conventional bank loans and, in some cases, outside investors.

 

SBA 7(a) equity injection: current rules in brief

Under the SBA’s Standard Operating Procedure 50 10 8, effective for applications submitted on or after June 1, 2025, a change-of-ownership 7(a) loan requires an equity injection of at least 10% of the total project cost. A seller note can count toward that injection only if it is on full standby, with no principal or interest payments for the entire term of the SBA loan, and it can account for no more than half of the required injection.

Source: Whiteford, Taylor & Preston client alert summarizing SBA SOP 50 10 8. Requirements change; confirm current rules and your eligibility with an SBA lender.

 

Plan for working capital. Beyond the down payment, budget for closing costs, professional fees, and enough working capital to cover payroll, inventory, and slow months during the transition.

 

 

PART 6

Questions to Ask When Evaluating a Business

 

Use these questions alongside professional due diligence. Your accountant and attorney can help you verify the answers.

Financial

☐  Do the profit and loss statements reconcile to the tax returns?

☐  What are the revenue and earnings trends over the last three years?

☐  Which add-backs are proposed, and how is each one documented?

☐  What capital expenditures will be needed in the next few years?

 

Customers and market

☐  How concentrated is revenue among the top customers?

☐  How are new customers acquired, and what does that cost?

☐  Who are the main competitors, and what differentiates this business?

 

Operations and people

☐  Which tasks does the seller perform personally, and how many hours per week?

☐  Are there written procedures and key employees who plan to stay?

☐  Which suppliers are critical, and are terms likely to continue?

 

Legal and location

☐  Can the lease be assigned, and what are the remaining term and renewal options?

☐  Which licenses, permits, or franchise approvals must transfer or be reissued?

☐  Are there pending disputes, liens, or compliance issues?

 

Transition

☐  How long will the seller stay to train and introduce you?

☐  Is the seller willing to consider financing part of the price?

☐  Why is the seller selling now?

 

Possible red flags

•  Financials that are incomplete, inconsistent, or unavailable without explanation

•  Large add-backs without documentation

•  Heavy dependence on the seller or a single customer

•  A lease nearing expiration without a clear renewal path

•  Reluctance to allow reasonable due diligence

 

 

PART 7

The Buying Process, Step by Step

 

Every transaction is different, but most small business purchases follow a similar path.

1. Define your criteria. Industry, size, location, role, and budget.

2. Talk with a lender. Understand how much you may be able to finance and what equity you will need.

3. Sign a confidentiality agreement. Sellers and brokers typically require one before sharing detailed information.

4. Review the information package. Study the business summary, financials, and operations overview.

5. Meet the seller and visit. Ask about operations, people, customers, and the reason for selling.

6. Submit a letter of intent. Outline price, structure, financing, contingencies, and timeline.

7. Complete due diligence. Verify financials, contracts, leases, licenses, and operations with your advisors.

8. Finalize financing and approvals. Lender approval, lease assignment, license transfers, and franchise consent if applicable.

9. Close. Sign the purchase agreement and closing documents, and transfer funds.

10. Transition. Work alongside the seller as agreed, introduce yourself to employees and customers, and settle in.

 

Build your team early. An experienced business broker, a lender familiar with acquisitions, a CPA, and a business attorney each play a different role. Involving them early can prevent costly surprises late in the process.

 

 

Sources

BizBuySell Insight Report, Q2 2026 (national U.S. data and buyer/seller surveys).

Whiteford, Taylor & Preston, “Client Alert: SBA Issues SOP 50 10 8, Key Changes Impacting SBA 7(a) Lending.”

Corporate Finance Institute, “Seller’s Discretionary Earnings.”

 

This guide is an educational resource, not a business valuation, investment recommendation, or legal, tax, or financial advice. Market figures are national, reported by a third party for the period shown, and may not reflect local conditions. Consult qualified professionals before making a purchase decision.