Short answer
- Under about $5M, the likely buyer is an individual with an SBA loan, and the lender sets the price ceiling.
- Competitors may pay more for synergies; private equity pays most for platform-sized businesses.
- Price and prepare for your realistic buyer.
The three kinds of buyers
| Individual (often SBA) | Strategic (competitor) | Private equity | |
|---|---|---|---|
| Typical size | Under about $5M | Any size | Usually $1M to $3M+ of EBITDA; smaller as add-ons |
| What sets the price | Lender: valuation cap and 1.25x coverage | Synergies and fit | EBITDA multiple and return targets |
| Your role after | Transition, up to 24 months as a consultant on SBA deals | Often short, or as an employee | Often stays; may roll equity |
| Deal features | Seller notes, sometimes on full standby; no earnouts with SBA | Cash, sometimes earnouts | Rollover equity, earnouts, working capital peg |
| Diligence | Lender-driven; QoE at $3M+ | Operational | Full QoE, legal and operational |
Individual buyers with SBA loans
The largest pool of buyers for Florida businesses under about $5M. Many are leaving corporate jobs, some are search-fund buyers. Their lender decides the maximum price: total debt can't exceed an independent valuation, and the business must cover its debt 1.25 times on historical earnings. They need a real transition from you, and the SBA now allows up to 24 months as a paid consultant. Be ready to carry part of the price as a seller note.
Competitors and strategic buyers
A competitor may pay more because your customers, crews or territory are worth more to them than to anyone else. They can also close faster. The risks: they learn your numbers and customers during diligence, and they may not keep your people or your name. Tight NDAs and staged disclosure matter here.
Private equity
PE firms pay the highest multiples for businesses big enough to be a "platform," usually several million of EBITDA. Smaller businesses get bought as "add-ons" at lower multiples. Expect rollover equity, where you reinvest part of your proceeds, and sometimes an earnout. The second payday on the rollover can be large, or not, depending on the fund.
How to choose
- If you want the cleanest exit and the business runs without you, test strategic and PE interest.
- If the business depends on you and earns under about $1M, an SBA buyer is the likely outcome. Price for the lender.
- If you want the most money and are willing to stay, a PE add-on with rollover may win, but model the risk.
I've sat in the PE seat and bought with an SBA loan. I'll tell you which buyer is realistic for your business before you spend months chasing the wrong one.
FAQ
Who buys small businesses?
Mostly individual buyers using SBA loans for businesses under about $5M, plus competitors and strategic buyers at any size, and private equity for larger platforms or as add-ons.
Do private equity firms buy small businesses?
Usually as add-ons to a larger platform they already own. As standalone platforms, PE typically wants several million dollars of EBITDA.
Sources
This guide is general information, not legal, tax or lending advice. SBA rules and Florida law change; confirm current terms with your lender, attorney and CPA.