Own It · Buying a business
Acquiring an established, profitable small business can create ownership income faster than building from zero — and it can also create debt obligations that outlive the business's performance.
Small businesses are commonly priced on a multiple of Seller's Discretionary Earnings (SDE) or EBITDA. Multiples vary by industry, size, customer concentration, owner dependence, and deal terms.
Many small acquisitions combine buyer equity, bank or SBA-guaranteed debt, and seller financing. Personal guarantees are common.
Diligence tests whether earnings are real, repeatable, and transferable without the seller.
Transition risk is the most underestimated part of acquisition. Staff, customers, and vendors all reassess after a change in ownership.
Price is commonly discussed as a multiple of earnings, with adjustments argued over what the earnings really are. The quality and durability of those earnings matter more than the headline multiple.
Deals combine buyer equity, lending and often seller financing or an earn-out. The structure determines how much risk sits with you on day one.
It tests whether the business you are buying is the business you were shown — customer concentration, owner dependence, the real state of the books, contracts and obligations.
The first year is about stabilising: keeping staff and customers, learning the operation before changing it, and managing cash through the transition.
Educational answers only — not financial, tax, legal or insurance advice.
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