How to Get the Best Price for Your Business

Most sellers think getting the best price starts with finding the right broker. It does not.

It starts with understanding how buyers build their offers. A buyer’s number is not arbitrary. It comes from a formula: cash flow, debt service coverage, and SBA underwriting limits. If you do not know how that formula works, you are negotiating blind.

Here is what the buy side actually looks at, and how sellers who understand it walk away with better outcomes.

What “Best Price” Actually Means to a Buyer

The best price for your business is not the highest number on a listing site. It is the highest number a qualified buyer can get financed and still make the deal work.

Most sellers do not think about it that way. But it changes everything.

A buyer using SBA 7(a) financing, which covers the majority of business acquisitions under $5M, is constrained by debt service coverage. The business’s cash flow has to comfortably cover the loan payments after the sale. Most lenders want to see a 2.0x debt service coverage ratio (DSCR) at minimum. We typically target 2.0x to 2.5x, and we push for deals that support that range before making an offer.

Take a concrete example. Say you are selling a residential cleaning company with $350K in seller discretionary earnings (SDE). At a 3.0x multiple, the asking price is $1.05M. The SBA loan on that deal at roughly 10.5% over 10 years generates approximately $136K in annual debt service. Your DSCR comes in around 2.6x. That deal closes.

Now push the price to $1.3M without a corresponding increase in earnings. The DSCR drops to around 2.1x. Still financeable, but thinner. Push to $1.5M and most buyers walk away or the lender says no.

The ceiling on your price is not what you think it is worth. It is what the debt service math supports. That is the number that matters.

Why Your SDE Number Is the Most Important Figure You Own

Before you think about multiples or asking prices, get your SDE number right. Everything else is built on top of it.

SDE is your net income plus your owner’s salary plus any personal expenses run through the business plus depreciation, amortization, interest, and one-time non-recurring costs. It represents the real economic benefit a new owner would receive from running the business.

Sellers frequently understate SDE by missing legitimate add-backs. We have seen this enough times to know it costs people real money. Common examples include:

Owner’s vehicle, fuel, and insurance paid through the business
Family members on payroll who will not transfer to a new owner
Non-recurring legal fees or one-time capital expenditures
Owner health insurance premiums
Personal meals, travel, or subscriptions flowing through the P&L

Each of these, properly documented, increases your SDE. And because most small businesses sell at 2.0x to 3.5x SDE, every $10,000 you add back legitimately could add $20,000 to $35,000 to your sale price.

The key word is legitimately. Buyers and their lenders will verify every add-back with three years of tax returns and bank statements. If your add-backs do not hold up in due diligence, the deal either reprices or falls apart.

Clean add-backs, well-documented, are one of the highest-ROI things you can do before listing. Not complicated. Just thorough.

How Buyers Use Multiples (and Why the Range Varies So Much)

Sellers often fixate on getting a 3.5x or 4.0x multiple and treat any offer below that as a lowball. That framing misses how multiples actually work on the buy side.

Multiples are not a starting point. They are an output.

The buyer runs the debt service math, evaluates business risk, and arrives at a number that makes the deal work financially. The multiple is just what that number divided by SDE happens to equal. So when a buyer offers 2.8x and you were expecting 3.5x, the gap is not about negotiation posture. It is about the underlying math.

Businesses that command higher multiples share specific characteristics:

Recurring revenue or long-term contracts
Low customer concentration (no single customer above 15% to 20% of revenue)
Documented systems that do not depend on the owner being present
Clean financials with no major inconsistencies across three years
A management team or key employee who can handle day-to-day operations post-sale

A landscaping company with 40% of revenue from one commercial contract, an owner who runs every job, and three years of financials that look different each year is going to land at 2.0x to 2.5x SDE. A comparable company with diversified residential contracts, an operations manager in place, and clean books that tell a consistent story might trade at 3.0x to 3.5x. Same industry. Very different valuations.

The multiple your business earns reflects real risk factors. Understanding those factors before you list gives you time to address them.

The Seller Note: What It Actually Means for Your Total Payout

Most sellers do not fully understand seller notes until they are sitting across the table in a negotiation. At that point, the structure feels like a concession.

It is not.

In a standard SBA 7(a) acquisition, the deal is typically structured as roughly 70% to 80% SBA loan, 10% buyer equity injection, and 10% to 20% seller note. The seller note covers the gap between the SBA loan maximum and the full purchase price.

What sellers are often not told is that SBA lenders require seller notes to be on full standby for the life of the SBA loan. In practice, that means no payments to the seller for up to 10 years. Zero interest in the best structures. We achieve 10-year full standby, 0% interest on over 90% of our deals.

That sounds bad on the surface. But consider the alternative. Without a seller note in the deal, the buyer’s equity requirement increases, the deal size shrinks, or the whole thing falls apart. The seller note is what makes the deal possible. It is a structural component of the financing, not a discount on your price.

So here is what matters for how to get the best price for your business: accepting a seller note to hold a higher purchase price is often a better outcome than insisting on all-cash and settling for a lower offer. A $1.2M deal with a $180K seller note on standby puts more money in your pocket than a $950K all-cash deal. Work through the arithmetic before pushing back on note structure.

All of That Covers How Deals Get Built. Here Is Where They Fall Apart.

Getting to a letter of intent (LOI) is not the finish line. The price can still change. The deal can still die. Due diligence is where the gap between what sellers think their business is worth and what buyers can verify becomes visible.

The items that cause deals to reprice or collapse most often:

Revenue concentration issues discovered late. If 30% of revenue comes from one customer that the seller did not disclose upfront, a buyer who finds it during due diligence will reduce their offer or walk. Surface these proactively. You would be surprised how many deals die right here.

Tax returns that do not match the CIM. If the numbers in your confidential information memorandum do not reconcile cleanly with three years of tax returns and P&Ls, expect friction. Buyers and their lenders will find the discrepancy. Every time.

Undisclosed liabilities. Outstanding lawsuits, deferred maintenance on equipment, pending tax obligations, or personal guarantees on business debt all create risk. They get priced into the deal one way or another.

Owner dependency. If you are the business (relationships, operations, and institutional knowledge all sitting with one person), the buyer has a real transition risk. Lenders take this seriously. Some deals will require longer transition periods or earnout provisions to account for it.

The way to protect your price through due diligence is to prepare for it before you list. Organize three years of tax returns, P&Ls, and bank statements. Document your processes. Have your attorney review any outstanding legal matters. Know your customer concentration before a buyer asks.

Sellers who enter due diligence prepared do not face as many surprises. Surprises are what reprice deals.

Negotiation Levers Sellers Often Miss

Sellers tend to negotiate on price and leave everything else flat. That is a mistake.

The total value of a deal includes several variables beyond the headline number. And some of them are worth more than you think.

Transition period. A shorter transition period has value to you. Your time has a cost. If a buyer wants six months of your involvement, that has to be priced. Standard transitions run 30 to 90 days. Anything beyond that is a negotiating point.

Non-compete scope. Buyers will ask for a non-compete, typically two to five years in your geography and industry. The narrower you negotiate the scope, the more flexibility you retain after the sale. This is especially important if you plan to stay active in the industry in an adjacent capacity.

Working capital peg. SBA deals require a working capital peg, the baseline level of cash and receivables that stays in the business at closing. If a buyer pegs this too high, you are effectively leaving money in the business. Understand the peg before you sign the LOI.

Earnouts. If a buyer proposes an earnout provision tied to post-sale performance, scrutinize the structure carefully. Earnouts can be legitimate, especially for businesses with significant projected growth. But they can also shift risk back to you for factors you no longer control. Know what you are accepting.

Sellers who understand these levers, and are represented by advisors who do too, tend to close at better effective prices than sellers who focus only on the headline multiple.

Frequently Asked Questions

What is the most important factor in getting the best price for your business?

A well-documented, defensible SDE number. Every dollar of legitimate add-back you can support with financial records translates directly into purchase price at a 2.0x to 3.5x multiplier. Clean financials, properly adjusted, close deals faster and at higher prices than businesses with comparable earnings but disorganized books.

How long does it take to sell a business using SBA financing?

From signed LOI to close, most SBA-financed business sales take 60 to 90 days. That includes 30 to 45 days for due diligence and 2 to 4 weeks for SBA lender underwriting. Deals with organized financials and no surprises tend to close at the faster end. Complex financials or additional lender requests can push the timeline to 90 to 120 days.

Is a seller note always required in an SBA business acquisition?

Not always, but it is standard in the majority of SBA 7(a) deals. Most lenders require the seller to hold a note representing 10% to 15% of the purchase price, placed on full standby for the loan term. This is not a red flag. It is a structural component of how most small business acquisitions are financed, and sellers who understand this going in are better positioned to negotiate the note’s terms.

What multiple should I expect when selling my business?

Most small businesses sell at 2.0x to 3.5x SDE or 2.5x to 4.0x EBITDA. The exact multiple depends on industry, customer concentration, revenue type (recurring vs. project-based), owner dependency, and whether the business’s cash flows support SBA debt service at the proposed price. Businesses with recurring revenue, low customer concentration, and documented systems consistently trade at the higher end.

Do sellers pay any fees when working with a buyer backed by Regalis Capital?

No. Regalis Capital is a buy-side advisory firm. We represent the buyer, not the seller. There are no fees, commissions, or obligations for sellers. Our buyers come to the table pre-qualified, properly structured for SBA financing, and advised by a team with experience closing acquisitions. Sellers deal with one serious buyer rather than fielding calls from tire-kickers.

Ready to Talk to a Serious, Pre-Qualified Buyer?

Regalis Capital works with buyers who are properly funded, SBA-qualified, and ready to move. There is no cost to you as the seller. No commissions. No broker fees. No obligation.

If you want to understand what your business might be worth to a qualified buyer, or you are ready to connect with one, start the conversation here.