$550k SDE business turns out to be $150k SDE business

January 12, 2026

by a searcher from Carnegie Mellon University in Denver, CO, USA

After getting under LOI, the seller decided to audit their finances with a trusted accounting firm recommended by the broker. There were just too many questions to proceed with my due diligence. After the audit, it turns out the SDE is just $150k. Fortunately, I haven’t spent a cent on this deal yet. Now, if the new purchase price can be an all cash purchase (maybe with a little bit of seller note), would you still try to get the deal done? I understand there are a lot of pros of buying bigger businesses that is the base of ‘Buy Then Build’. But the lack of deals and surplus of hungry buyers are making me get creative to just get in the ETA space.

Reply by a searcher
in Santa Barbara, CA, USA

Bro wants to buy a job. Don't set yourself up for failure, you want to be hungry not starving. Cold call businesses in your area and say: X, was curious if you guys are looking to expand or have you though about retiring. And if they say why? Be like, we'll I'm looking to make you an offer for your business, would you be interested? And then book an intro call, be like we'll just like you I'm currently busy but wanted to check in with you, what time this week you have a 15 minute spot in your calendar, I'd like to learn more about your company and introduce myself. Done

Reply by a searcher
from Massachusetts Institute of Technology in Colorado Springs, CO, USA

$150k SDE sounds like a challenging starting point. If you're going to build on top of that, consider it $0 SDE. You may need to hire a GM to run the business while you look for the next acquisition. Also, as you go through diligence, or you account for transition turbulence, that $150k could easily erode, and any bit of erosion will be painful at those amounts. Being eager (desperate) to get into ETA could easily leave you in a very tight spot. Go find a better deal.

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