Businesses with weak 2024 financials?

June 17, 2025

by a searcher in Illinois, USA

Wondering if any buyers or lenders are closing on businesses where the TTM or last fiscal year EBITDA are below the historical 3-5 year averages. I'd think banks would likely be leery of this dynamic, but I'm seeing quite a few businesses now where 2024 EBITDA was significantly weaker than the###-###-#### period. One business I'm keen on (for reasons beyond PnL) had a 2024 EBITDA that was half that of the prior 3 years. Are these deals still getting traded at a multiples that nears the most recent 3 year average?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I get this question often. Unfortunately lenders, both SBA and conventional banks, rely heavily on historical tax periods. Most lenders want to see historical cash flow in the last two years, year-to-date, and on a trailing 12-month basis that supports debt service. If there was a large drop in cash flow from 2023 to 2024, then lenders are likely going to look to lend on 2024 cash flow. Aside from that, lenders are going to be very concerned about what drove the drop in cash flow. Even though you might get a price that works with 2024 cash flow, if the drop looks like something that might continue, it could be hard to finance the business. That is why the year-to-date and trailing 12-month performance are going to be so important. If you have additional questions regarding financing you can reach me here or directly at redacted

Reply by a searcher
from London Business School in State of São Paulo, Brazil

I would explore the reasoning behind it. Look out for things that can break the deal (e.g., did the main client churn? why? did they have problems with suppliers? Did they grow SG&A but did not obtain the expected revenue, etc.) If you are confident you can turnaround said issues, then use this to buy it cheaper.

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