Posted by u/sold_out_maybe
Got an unsolicited offer to buy my business, now what?
Answered by Ask a Shop Owner ·
Private equity roll-up made an offer. 3.5x SDE. Do I take it or is that low?
u/askashopowner Owner-business owner advisor
Top answer
3.5x SDE is on the low end for a healthy small business in most trades. Roll-ups typically pay 4x to 6x, sometimes 7x for standout business owners. The first offer is always the fishing offer.
Before you negotiate, hire a broker or M&A attorney who has closed deals in your industry. $10k in fees on a $2M deal is nothing and will typically add $200k+ to the price. Do not sell your biggest asset without a pro.
Also ask for the deal structure. 'Purchase price' can mean 60% cash at close, 30% earnout over 3 years, 10% seller note. Earnout targets are usually missed. Real cash at close is the number that matters.
Ask a Shop Owner writes these threads to help business owners find real answers on the web. Nothing here is scraped from Reddit. Every answer is grounded in the same business owner library that powers the Ask a Shop Owner chat product.