How often do true cash buyers show up at the sub-$1M level?

May 13, 2025

by a searcher in Texas, USA

We’re in the early stages of planning an eventual exit and would love the community’s insight. This is not a formal sale post — we’re still building and not listing anything yet, but trying to get clarity ahead of time. The business operates as a DBA under an entity that’s been around for 10+ years. For most of its life, it was owner-operated and brought in ~$100K in profit at most. Over the past few years, we’ve repositioned and scaled operations — it’s now poised to hit $300K+ in profit and approaching a ~$1M valuation ($300-400k yearly profit) based on growth and performance trends. That said, the DBA itself has under 3 years of formal operating history, so tax return visibility is limited under the current structure. We’re trying to understand a few things: 1. How often do true cash buyers show up at this sub-$1M level? Or is SBA/seller-financing basically a requirement? 2. With less than 3 years of tax returns for the DBA, what financing hurdles would a buyer face, especially with SBA? 3. Any general advice on how we should plan ahead to make this business more attractive to searchers or acquisition entrepreneurs? Appreciate any feedback from those who’ve been on either side of these deals.

Reply by a professional
from Bentley College in Miami, FL, USA

Great set of questions — you're thinking about exit planning at the right time, which gives you the best shot at a smooth and profitable transition. 1. Cash Buyers at the Sub-$1M Level: They’re rare. Most buyers in this range use some mix of SBA loans, seller financing, or investor capital. A pure cash buyer might show up, but they’ll often expect a discount in exchange for speed and simplicity. More commonly, you'll find buyers seeking an SBA-backed deal, especially if the business cash flow is strong and consistent. 2. SBA Hurdles with Less Than 3 Years of Returns: This is a real constraint. Most SBA lenders want to see at least two full years of tax returns showing stable or growing earnings. If the growth has been recent, be prepared to explain it thoroughly with clean financials, third-party bookkeeping, and perhaps interim statements to demonstrate ongoing performance. Structuring the deal with partial seller financing could also help bridge gaps in perceived risk. 3. Making the Business More Attractive: Focus on clean books, documented SOPs, diversified customer base, and recurring or repeatable revenue. If possible, consider converting the DBA into an LLC or Inc. to build a more transferable entity structure. The more turnkey it looks, the more comfortable a buyer (and their lender) will feel. If you ever want a second opinion on how buyers or advisors might evaluate your business, platforms like DueDilio can connect you with M&A experts for a pre-sale assessment. It's a good way to identify and fix any blind spots early.

Reply by a lender
from University of Southern California in Los Angeles, CA, USA

We’re trying to understand a few things: 1. How often do true cash buyers show up at this sub-$1M level? Or is SBA/seller-financing basically a requirement? - Not very often at all. Investor's with that much liquidity will use financing to buy larger deals. Sometimes international investors looking to get visa's might buy the business. 2. With less than 3 years of tax returns for the DBA, what financing hurdles would a buyer face, especially with SBA? - I think 2 years of tax returns is the minimum and the loan pricing is going to be higher because your buyers will have to get financing from some of the more agressive lenders. They can expect prime + 2.5%. 3. Any general advice on how we should plan ahead to make this business more attractive to searchers or acquisition entrepreneurs? - Make sure your books are super clean, clearly identify addbacks and have evidence for the addbacks ready and most important grow the business. Declining revenue and EBITDA can be harder to finance. I love to help you with your buyers with their SBA loans. We work with all the major SBA lenders.

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