OwnerPath buyer guide

How to Analyze a Business Listing

A listing is a seller’s marketing summary, not verified diligence. Use it to form hypotheses—not conclusions.

1. Separate claims from evidence

Record asking price, revenue, seller discretionary earnings (SDE), owner hours, employees, lease terms, and stated reason for sale. Mark every number as seller-reported until it matches source documents.

2. Rebuild cash flow

Start with reported profit, then list each addback. Ask whether it is documented, genuinely nonrecurring, and unnecessary for a new owner. Include replacement labor, maintenance capital spending, working capital, and taxes in your own view.

3. Compare price and cash needs

Calculate price-to-SDE only after adjusting cash flow. Add the down payment, closing costs, working capital, and a reserve; acquisition price is not the full cash requirement.

4. Identify missing proof and concentration

• Three years of tax returns and monthly profit-and-loss statements
• Payroll and owner-role detail
• Customer and supplier concentration
• Lease transfer, licenses, and equipment condition
• Support for every material addback

5. Pick one next move

Call when the rough economics and buyer fit are plausible. Request proof when claims drive the result. Reprice when verified cash flow cannot support the ask. Walk away when a fatal risk or mismatch remains.