For those who closed brokered deals, what SDE multiple did you acquire for?

searcher profile

March 25, 2024

by a searcher from University of California, Los Angeles in Orange County, CA, USA

I'm looking at buying a manufacturing or distribution business in SoCal in the range of $600k - $750k SDE. After talking to many brokers and lenders, I keep hearing different "average" multiples. If you have experience closing a brokered deal for a company in a similar space/cash flow range, what multiple did you end up acquiring for?

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commentor profile
Reply by a searcher
in Boston, MA, USA
Under LOI for a distribution and manufacturing business now in that exact range. 3.8x is about as high as you can go before you'd need significant equity down with the SBA. If you assume $150k salary, then you'll be below the 1.3 debt coverage ratio for anything above that ballpark. The brokers will tell you otherwise, but unless the seller thinks they can find a highly capitalized buyer, everyone else working with the SBA will be in the same boat. Helps to walk the broker and the seller through the bank models so they know your constraints
commentor profile
Reply by a professional
from University of Colorado at Boulder in Fort Myers, FL, USA
^redacted‌, We tend to review multiple sources when valuing businesses. Depending on who we represent, they will pay the broker. Hope that helps provide context. Feel free to shoot me a DM if you'd like to chat further.
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