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-operator 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 operators. 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.
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