Is ETA the 2025 equivalent of dropshipping?

January 12, 2026

by a searcher from The University of Chicago - Booth School of Business in Sacramento, CA, USA

Genuine question for the community: Are we seeing ETA turn into another "guru-ified" get-rich-quick scheme? The pattern looks pretty similar: - Flood of newcomers chasing returns without understanding operations - Brokers pushing overpriced deals to eager buyers with SBA letters - Podcasts and courses promising financial freedom through small business acquisition - "Advisors" and service providers with 18 months of experience suddenly positioning themselves as experts - People convincing themselves that zero-barrier-to-entry businesses (landscaping, pool cleaning, pressure washing) are "great deals" despite lacking any defensible moat, recurring revenue, or competitive advantages that would be table stakes in traditional search - LinkedIn full of "I closed my first deal" humble brags I'm NOT saying traditional search or self-funded deals lack merit since plenty of searchers especially from before the last year or two are doing hard work and creating value. But the signal-to-noise ratio seems to be deteriorating fast. Are we headed for a reckoning when the easy money dries up and reality hits? Or am I just being cynical about the influx of new entrants? Curious what the veterans think.

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

Great question. I will be the first one to try and continue the discussion, possibly at my own peril as I do not want to anger anyone on this platform. I think there are plenty of very qualified individuals and plenty of qualified businesses out there for ETA to continue to be a robust market going forward. There is always demand for new operators and the baby-boomers are continuing to age out. However, there does appear to be a lot more noise than there was several years ago and a lot more service providers for all aspects of the process. There are some very good newer service providers who have shown up and are filling a much needed niche of helping buyers analyze and close deals. However, I have seen some that I am not as sure have the knowledge base. If you do not mind, I can use my industry as an example. The number of new "loan brokers" I have seen show up in the last year is crazy. The question is how many of them really have experience in lending. I have been in commercial lending for roughly 30 years with a strong credit background in traditional banking, and our firm has been around for 16 years, and we are constantly having to adjust as the market changes. I question if many of the new entrants have the experience to really sustain and help their clients in this market. There is hiring someone to just shop a loan for you, and there is hiring an expert that can help you manage the process and guide you on the front end and help you figure out what a good deal is and that knows how to solve problems when they arise to get to a closing. My part of the industry has definitely become inundated, and I am not convinced they all have the experience they should have. I am also seeing a lot of deals coming our way that do not make much sense. I see many businesses that are really lifestyle businesses with EBITDA of a few $100,000 being listed for 3.5 to 5x multiples. The multiples just are not justified. Then when you look at the EBITDA adjustments, they are often items lenders will not accept or are not verifiable. Or there are items the broker has not taken into account like future CAPEX needs and buyer salary, and once those are removed the adjusted EBITDA drops down well below any sort of reasonable level. Sometimes I question how these businesses even got listed in the first place. A lot of this I believe stems from inexperience or desperation to find and make deals happen. I guess all of this is to say, I think you are correct. There are a lot of newcomers and some are looking to get rich without fully understanding the market. However, I will tell you there is still a very legitimate market here as well and many qualified buyers, brokers, consultants, etc. I think the key is finding the right experienced partners and for buyers to focus on finding deals that make sense.

Reply by an intermediary
from The University of Chicago in Chicago, IL, USA

I have been M&A Advisors for LMM businesses for almost 40 years representing sellers (80%), buyers (20%). Few times both. Majority of the times buyers are individual. first time buyers. I have taught M&A for 20+ years. I have seen many cycles. Few observations: 1) Multiples go up after a slow year. But the price is lower than what it would have been 2 years prior. 2) ETA was born after 2010 when SBA increased the cap from $2 M to $5 M. At $2 M, most businesses were main-street. At $5 M you get into LMM businesses that need educated buyer which created ETA. 3) Searchers are relying more on "multiples" than doing financial modeling. 80% focus should be on understanding the operations, people skills, customer relations, sales growth, etc. Many searchers want to a hire a GM on day-1 or soon after. That is a recipe for disaster. Many searchers want to buy with $0 out of pocket. Again, a major risk. 4) Pre-ETA, the buyer had two bosses, the business and the family. With ETA there is a 3rd one, the investor group. High leverage and managing investor group increases the challenge. When sellers find that out, they often walk (unless they are selling a lemon). 5) Barriers to entry: No business has barrier to entry. Motorola with high number of patents in cel phone got out-smarted by more than one player. The barrier to entry in LMM is "service", service to customers, suppliers, employees, etc. 6) Most searchers are empowered to take a business to the next level ... if they focus on operations and people side rather than the "multiples".

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