Is overpaying better than not buying at all?

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May 27, 2025

by a searcher from University of Leeds in Florida, USA

I’d be interested in people’s thoughts: looking to acquire a small business (hundreds of thousands asking price) and due to geographic constraints struggling to find something suitable. The one option we have found is construction related and the seller is looking for 3x multiple on SDE (a little of which is questionable), when###-###-#### seems much more in line with historic and current sales. The location is perfect though and they are offering to do seller financing after 10-25% down. Are we foolish to go-ahead with the deal, when the alternative is loss-of earnings (from not buying a business) and possibly giving up the search? Has anyone else overpaid for convenience?
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Reply by a professional
in Lucknow, Uttar Pradesh, India
I’ve overpaid twice. Once turned out dumb. Once turned out brilliant. The difference? On the brilliant one, I knew exactly how I was gonna grow it. I had a plan to increase prices, upsell, cut some waste, and plug it into a few existing relationships. So that 3x multiple ended up feeling like 1.5x within 9 months. The dumb one? I just liked the business and location. No real growth upside, no unfair advantage, no lever to pull. And I sat on it like a confused landlord wondering why rent wasn’t going up. So yeah… sometimes paying more does beat waiting forever or sitting on cash that earns zilch. But only if you know how you’re gonna make the juice worth the squeeze. If not… keep hunting or get creative.
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Reply by a searcher
from University of Southern California in Del Mar, CA 92014, USA
Learning the construction business from scratch is tough, particularly if there is key man risk, but if you have confidence that you can support the debt, de-risk post-close, grow it as needed, I'd rather overpay for a great business than pay fair price for an average or not great business. Believe Warren Buffett has a similar quote but he says it a lot more eloquently than I can
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