Understanding bizbuysell listings - Introduction

BizBuySell PDF Instructions - This 100-page digital book will teach you:

  • How to evaluate the purchase of a business
  • What you are actually buying when you buy a business
  • The value drivers of a business
  • How to find businesses for sale
  • What the three main areas of focus should be on
  • How financing is key to buying and selling
  • How to negotiate a buyer-seller friendly offer
  • The importance of due-diligence

🔍 What You’ll Usually See on BizBuySell Listings:

  • Asking Price: The seller’s price for the business.

  • Cash Flow or SDE (Seller’s Discretionary Earnings): The actual money the owner “takes home” annually after operating expenses, often used to calculate value.

  • Gross Revenue: Total sales, but can be misleading alone without expenses context.

  • Cash Flow Multiple / SDE Multiple: How many times the cash flow the seller is asking (e.g., 2.34× SDE).

  • Inventory: Value of goods included in sale (important for retail businesses).

  • FF&E (Furniture, Fixtures, and Equipment): Tangible assets included.

  • Lease Terms: Monthly rent, length of lease, renewal options.

  • Reason for Selling: Often a clue about motivation (retirement, burnout, relocation).

  • Employee Info: Number of employees and roles — critical for operations continuity.

  • Growth Potential / Challenges: Seller or broker’s notes on opportunities and risks.

🧠 Extra Concepts to Know When Reading BizBuySell Listings:

  • Normalized Earnings: Earnings adjusted to remove unusual or one-time expenses, or owner perks like personal expenses run through the business.

  • Working Capital Adjustments: Sometimes the sale price depends on a certain level of working capital included; too little working capital means you may need to put in cash after buying.

  • Non-Compete Agreements: Make sure seller agrees not to open a competing business nearby.

  • Training Period: Whether the seller will train you after sale and for how long.

  • SBA Loan Eligibility: Some listings note if the business qualifies for SBA financing — critical for Ben Kelly’s “no personal capital” strategy.

✅ Tips When Reviewing BizBuySell Valuations:

  1. Ask for full financials before making assumptions.
    Listings may only show summary numbers; always request tax returns, P&L statements, and cash flow reports.

  2. Calculate valuation multiples yourself.
    If they don’t list SDE or EBITDA, ask for seller’s discretionary earnings and do the math.

  3. Beware of inflated revenue without profit.
    High sales don’t mean the business makes money. Look at cash flow carefully.

  4. Understand seasonality and trends.
    Is revenue steady or seasonal? Are profits growing or shrinking?

  5. Watch for “Seller’s Discretionary Earnings” vs “Net Profit.”
    SDE often includes owner perks; net profit is after all expenses.

  6. Factor in the cost of ownership transition.
    Training, hiring, and any upfront investments may affect early profits.

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