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MatchRight Advisors Executive Framework

MatchRight’s Local Business (for sale) Advisory Services

A Strategic Playbook for Sourcing, Evaluating, and Purchasing Existing Local Businesses

Overview

The Acquisition Playbook

  1. 01 Sourcing Opportunities

    Target businesses with a proven track record (typically 3+ years of profitability) generating $100k to $1M+ in Seller’s Discretionary Earnings (SDE).

    • Online Marketplaces: Utilize platforms like BizBuySell, Enterprise Brokers, and Axial to filter by geography, cash flow, and industry.
    • Off-Market Outreach: Contact local business owners directly via targeted phone calls or direct mail. Focus on owners aged 55+ approaching retirement without clear succession plans.
    • Local Professional Networks: Establish relationships with local commercial real estate brokers, M&A advisors, CPAs, and business attorneys who maintain early visibility on quiet sales.

  2. 02 Preliminary Screening & Valuation

    Before committing resources to full due diligence, evaluate high-level business health and establish an accurate baseline valuation.

    Seller’s Discretionary Earnings (SDE) FormulaSDE = Net Income + Owner Compensation + Owner Benefits + Non-Cash Expenses + One-Time Discretionary Expenses

    Valuation Metrics

    Most local small businesses trade at a multiple range of 2.0x to 4.0x SDE, contingent on recurring revenue stability, growth potential, industry trends, and owner independence.

    Red Flags to Screening Out Deals

    • Customer Concentration: A single account providing >20% of revenue.
    • Owner Dependency: Operations relying strictly on personal owner ties or 60+ hour work weeks.
    • Declining Revenue: Multi-year sales shrinkage without clear explanation.

  3. 03 Structuring the Offer (IOI & LOI)

    Submit a non-binding Letter of Intent (LOI) outlining the acquisition terms and securing a 60-to-90-day exclusivity window to execute due diligence.

    • Asset Purchase vs. Stock Purchase: Asset purchases are generally preferred to step up the tax basis on acquired equipment/property while mitigating inherited corporate liabilities.
    • Seller Note (Financing): Require the seller to carry 10% to 20% of the purchase price via seller financing. This ensures seller commitment through transition and serves as a buffer against unrecorded liabilities.
    • Earnouts & Holdbacks: Tie a portion of the purchase price to post-closing performance metrics or escrow funds to safeguard against sudden customer churn.

Step 4: Comprehensive Due Diligence Audit

WorkstreamKey Action ItemsCritical Risk Areas
Financial AuditReconcile 3–5 years of corporate tax returns against P&Ls and monthly bank statements.Discrepancies between reported profit and tax filings; unrecorded cash revenues.
Legal & ComplianceReview commercial real estate leases, employee agreements, vendor contracts, and litigation history.Assignment/transferability restrictions, pending legal claims, short lease terms.
Operational & TechEvaluate physical asset condition, conduct inventory counts, and audit written SOPs.Aging equipment needing immediate CapEx; unwritten operational processes.
Customer & VendorAnalyze churn rates, top customer accounts, and supplier agreements.Key supplier dependencies; non-transferable vendor discount pricing.

Step 5: Securing Financing & Closing Transaction

  1. Capital Stack Breakdown

    SBA 7(a) Loan (75%–90%) + Buyer Cash Equity (10%–20%) + Seller Note (5%–15% standby equity).

  2. Definitive Closing Documents

    Finalize the transaction with an M&A attorney via an Asset Purchase Agreement (APA), Non-Compete Agreements (3–5 years within a practical geographic radius), Bill of Sale, and Transition Services Agreements (TSA) securing 30–90 days of structured seller onboarding.

MatchRight Advisors Executive Framework

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