Legal Counsel for Michigan's Main Street Businesses
Your small business is your life's work. Whether it's a family restaurant, local service company, or specialty retailer, we provide the same sophisticated M&A expertise that larger companies receive, tailored to your needs and budget.
Small businesses valued between $1-5 million represent 85% of all business sales in Michigan, yet they face unique challenges in the M&A market.
Unlike larger deals dominated by private equity and strategic buyers, small business sales involve individual buyers, SBA financing, and owner-operator transitions. Success requires understanding these dynamics and adapting strategies accordingly.
Small businesses are valued on Seller's Discretionary Earnings (SDE) rather than EBITDA. SDE adds back owner compensation and benefits to show true earning potential for a new owner-operator.
Restaurants, bars, cafes, and catering businesses with loyal local followings.
Typical Multiple: 2-3x SDE
B2B and B2C service providers with recurring revenue and established clientele.
Typical Multiple: 2.5-3.5x SDE
Specialty retailers and online businesses with unique products or niches.
Typical Multiple: 2-3.5x SDE
Small manufacturers and fabricators serving local and regional markets.
Typical Multiple: 3-4x SDE
Wholesale and distribution businesses with established supplier relationships.
Typical Multiple: 2.5-3.5x SDE
B2B professional service firms with specialized expertise.
Typical Multiple: 3-4x SDE
The majority of small business buyers are individuals seeking business ownership.
Financing: SBA loans, seller financing, personal funds
Competitors or complementary businesses seeking expansion.
Advantages: Quick decisions, synergies, cash available
Internal transitions to family members or key employees.
Benefits: Smooth transition, culture preservation
MBA graduates and entrepreneurs backed by investors.
Focus: $1-3M EBITDA, growth potential
Over 50% of small business acquisitions use SBA 7(a) loans, which allow buyers to acquire businesses with just 10% down. Understanding SBA requirements helps position your business for maximum buyer interest.
Seller Note Requirement: Most SBA deals require 5-15% seller financing on standby for 2 years, demonstrating confidence in the business.
$100K-250K SDE
2.0-2.5x Multiple
Owner-operator businesses
$250K-500K SDE
2.5-3.0x Multiple
Established operations
$500K-1M SDE
3.0-4.0x Multiple
Scalable businesses
Owner dependence is the #1 value killer for small businesses.
Solutions:
Many small businesses mix personal and business expenses or use cash accounting.
Solutions:
Most small business sales include 10-30% seller financing.
Protection Strategies:
While businesses with $500K+ annual revenue attract more buyers, profitable businesses with $250K+ revenue can sell if they demonstrate stability and transferability. The key is showing at least $100K in SDE (Seller's Discretionary Earnings) to support buyer financing. Businesses under these thresholds may need creative structures like earnouts or seller financing.
Small business sales typically include 10-30% seller financing. SBA loans often require 5-15% seller notes on standby for 2 years. Cash buyers may request 20-40% seller financing to share risk. Terms usually span 3-5 years at 6-10% interest, secured by business assets. Seller financing often increases sale price by demonstrating confidence.
Business brokers add significant value for small business sales through buyer networks, marketing expertise, and process management. They typically charge 10-12% commission but often achieve 20-30% higher prices through competition. The key is selecting an experienced broker with relevant industry experience and verified past sales. Always use an M&A attorney alongside your broker.
Most small business buyers want to retain existing employees for continuity. Asset purchases allow selective hiring while stock sales transfer all employees. Buyers typically interview key employees during due diligence. Consider stay bonuses for critical staff. Michigan law requires notice for significant layoffs, but small business sales rarely trigger these requirements.
Don't let your business size determine your outcome. Get the same sophisticated M&A representation that larger companies receive, tailored to your needs and budget.
Confidential. Selective engagements.