Transcript
Memo Part 1 of 6. The Thesis and the Plain English Glossary. The plan? A first acquisition in the $600K to $1.8 million range that already runs under a manager, bought at mainstream prices, financed under the SBA rules that took effect October 1st, 2026, in categories where CRM, RevOps, and AI Automation Edge actually moves the numbers. This page is the thesis, the buy box, the diligence gates, and the pipeline design, all built from marketplace and market research done October 17th, 2026.
Thesis 01, the thesis in four points. Point 1, two different markets, two different engines. Use BizbuyCell plus BizQuest and Georgia Broker Networks as the main street deal engine, and acquire.com, Empire Flippers only for digital deals. They are not substitutes. BizbuyCell's close deal median in 2025 was $350,000 at 2.61 times cash flow. So most inventory is too small or too owner operator for this buy box. Filtering, not browsing, is the job. Website closers and axial mostly sit above the buy box.
Point 2, the binding constraint is SBA plus semi-absentee. Since October 1st, 2026, SBA SOP 5010 8.1 governs first-time acquisitions, 10% equity that cannot be waived, 1.25 times debt coverage on historical, not projected earnings, and an independent valuation on every change of ownership. Passive businesses are ineligible for 7A loans. Semi-absentee with a real manager, owner actively managing the business, can be financed. Absentee in passive, pitch to a lender, likely cannot.
Get a lender's written read on the structure before any LOI. Point 3, pay main street prices, not lower middle market prices. Benchmarks, 2.0 times SDE under 500K, 2.8 times at 500K to 1 million, 3.0 to 3.1 times at 1 million to 2 million. Abita to multiples, roughly 3.5 to 4.8 times at 2 million to 5 million, and 4.5 to 5.8 times at 5 million to 50 million. Do not apply abita to multiples below 2 million. Recast every listing's SDE after deducting a market rate manager salary.
That single adjustment kills most absentee listings, and it should. Point 4, buy where the operating edge is real. Best fit? 1. B2B services and productized agencies. 2. Manager run-home services with recurring contracts in Metro Atlanta. 3. Pet services as an add-on or expansion. Avoid as a first deal, content sites, most e-commerce, and any deal whose cash flow depends on the seller's personal license, relationships, or hands. Plain English. 2. Plain English.
The words on this page, every acquisition term used in this memo, in plain language, with a quick example for each. Where word first shows up in the memo, it now carries a dotted underline that jumps back here. Read this section once, and the rest of the page gets much easier.
The one worked example that unlocks most of the page A listing asks $1,050,000. If seller claims SDE of $450,000, but a real manager would cost $80,000, and other honest fixes cost $20,000, so recast SDE is $350,000. A multiple is the price divided by the cash flow. $1,050,000 divided by $350,000 equals 3.0 times, meaning you are paying three years of that cash flow upfront. At the SBA's floor, that $350,000 must also cover the yearly loan payments, at least 1.25 times over.
Nearly every number in this memo is some version of that one paragraph. SDE sellers discretionary earnings. The money the business throws off for one owner who works in it. Profit plus the owner's salary and perks added back, because the new owner would take that pay too. Example, a shop shows $210,000 profit, and the owner pays himself $90,000. SDE starts at about $300,000 before other add backs. Recast SDE SDE, fixed for real life SDE, after you subtract what the listing quietly left out.
A market salary for a manager to replace the owner, market rent, and costs the seller called one time but pays every year. Example, seller says $450,000. SDE manager costs $80,000. Heather fixes $20,000. Ccast SDE is $350,000, and that is the only SDE this buy box trusts. Multiple years of cash flow in the price, price divided by cash flow. It answers one question, how many years of today's earnings am I paying for up front? Example, $1,050,000 divided $350,000 recast SDE equals 3.0 times.
Small businesses mostly sell between 2 times and 3.1 times SDE. EBITDA, earnings before interest, taxes, depreciation, amortization, profit measured with the owner's pay left out, because a paid manager is already counted in the costs. Bigger businesses over $2 million are priced on EBITDA. Small ones are priced on SDE. Watch for comparing a 2.8 times SDE listing to a 5 times EBITDA business is apples to oranges and the most common first buyer pricing mistake.
CIM, Confidential Information Memorandum, the sales book for a business, the broker's polished packet with the story, the financials, the staff, and the customers. You receive it after signing an NDA. Plain read, it is a marketing document written to sell. Enjoy it, then verify every number in it during diligence. NDA, Non-Disclosure Agreement, a written promise to keep the deal quiet. You will not share the business's private numbers or tell its staff it is for sale.
Signing one is normal and expected before financials are shared. Good to know, an NDA does not commit you to buy anything. It only protects the seller's information. LOI, Letter of Intent, your written offer before the final contract. Price, how the deal is structured, your timeline, and your conditions, such as 45 days to check the numbers and financing that has to come through.
Plain read, mostly not binding on price, but it locks the serious terms and usually gives you exclusive time to do diligence without competition. Do diligence, the checking phase, the period after an LOI where you verify everything the seller claimed. Taxes, bank deposits, customers, leases, licenses.