Thanks for the question Paul! I am looking at the same options and wondering the same thing… I have passed on a few deals because I perceived as too large. However, everything that I’m reading is saying the larger is actually a lower risk. Is there anyone that has bought both and would be willing to share some direct experience?

Paul, that is a simple question with a very complex answer that depends on a broad array of variables. For the most part, smaller deals have greater risk because there is far less margin for error if the business declines or gets hit with significant cost increases or changes in market dynamics, government regulation or competition. Also, cash flow is usually more critical and difficult to manage. If you have access to additional working capital outside of the business, you can mitigate some of this risk to a certain degree. Also, for better or worse, there is less to lose on a smaller business but generally, the upside is not as great in terms of dollars even though on a percentage basis, gains may be greater than on a larger business.