Factors impacting SDE multiple

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher
in Boston, MA, USA

4mos ago

Factors impacting SDE multiple

Any thoughts on whether these factors should lead to lower SDE multiple: 1- B2C business 2- Owner responsible for all sales and growth, and not staying around after a couple of months of transition 3- Mixed employee reviews, but good customer reviews (though low number) 4- Operations are half systemized, half manual

0 Likes

91 Views

reply by a lender 4mos ago
from Cornell University in Los Angeles, CA, USA

Hi Anon - nice to meet you. Happy to share some insights here. Short answer: yes, all four of those factors should lower the multiple. The owner driving all sales and growth is the biggest one. If the buyer is taking over and the person responsible for revenue is gone after a couple months, that's major risk. There's no sales infrastructure to fall back on, so the buyer is basically hoping they can replicate what the owner did. That alone justifies a meaningful discount. B2C businesses typically trade lower than B2B. Revenue is less predictable, customer acquisition costs are usually higher, and there's less stickiness compared to B2B contracts and recurring relationships. Mixed employee reviews mean the buyer might be dealing with turnover after closing. That costs time and money. Good customer reviews help, but a low number of them doesn't say much. Small sample size. Half-systemized operations means the buyer has to finish building the business after they buy it. That's extra work and extra risk, and buyers will price that in. Any one of these would push the multiple down. All four together, you're looking at the lower end of the range for that size and industry. We have a lot experience financing various companies via the SBA. If you ever need help reviewing a deal, I am happy to help. We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: redacted. Look forward to chatting!

reply by a searcher 4mos ago
from University of Pennsylvania in San Francisco, CA, USA

B2C doesn't seem like a reason to reduce the multiple. All depends on the size, but they aren't inherently worse. Bad employee reviews and operations half systemetized seem like par for the course in SMB land. I would try to negotiate, but that is already what is driving a multiple down from 10x to 3/4x. Biggest red flag is the owner responsible for all sales and growth. Both on the multiple side as well as whether or not this is a good deal for you at all.