500k-750k SDE: Self Funded Search "No Mans Land"?

by a searcher from Michigan State University

1 week ago

I am a self-funded searcher, and I keep coming across solid businesses in the $500k-$750k SDE range.
The "official line" from the well-known self-funded search investors is they are looking for deals with 750k+ in SDE (preferably $1m+).
On the other hand, I assume there are relatively few searchers with $500k personal deployable cash (750k SDE at 4x EV multiple = $3m, $300k (10%) down + 150k (5%) post-close liquidity + $50k closing costs.)
How are these deals getting done? Are the established investors coming down? Is it primarily friends and family coming in at this level? or are searchers just bringing their own cash?
If you or someone you know has bought a business in this range I would love to hear your story.
Thank you!

10 likes
479 views
23 comments

searcher from IE Business School

Derek, I feel that it is the more underserved territory, much less searchers there. All of my deal flow is in that range as of the past year of my search. I feel that investors are harder to come by, but there are quite a bit of people out there that will be happy to take a look. There are many other factors involved other than minimum EBITDA, from my experience.

2 days ago | like reply | 1 like

investor from Seattle University

Agree with Bruce. SDE is buying a job. $750 SDE is likely $550 to $600 in EBITDA.

3 days ago | like reply | 1 like

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