📊 What Small Businesses Actually Sell For: The Reality of SDE Multiples vs. List Price

Most small businesses are listed at 2.5x to 3x SDE multiples. But across thousands of transactions and decades of data, the typical small business sells for 85-86% of its asking price.

If you're buying a business, this gap determines whether you budget correctly or overpay. If you're selling, it determines whether you close the deal or watch it fall apart during due diligence.

Most main street businesses (under $2M) are valued using Seller's Discretionary Earnings (SDE)—the total financial benefit to an owner-operator: net profit plus owner compensation plus discretionary expenses.

According to BizBuySell's industry data, the median small business sold for $329,000 in their dataset, rising to $352,000 in Q2 2025.

*Switches to EBITDA-based valuation

(Want deeper valuation context? See our guide on five proven methods to value a small business.)

Every $1 in list price becomes ~$0.85 at closing unless prepared professionally.

The historical data is remarkably consistent:

This pattern holds across market cycles. A $500,000 listing typically closes at $425,000-$430,000.

The exception: supply-constrained sectors with multiple qualified buyers.

According to BizBuySell's Q3 2025 report, certain essential service businesses consistently sell at or above asking price. One broker reported: "The market is still hot for HVAC, plumbing & heating, electrical, roofing, and landscaping. I have 300+ active buyers in my database. There are not enough listings for all the buyers."

Sectors that routinely exceed list price:

When supply is tight and multiple buyers compete, sellers can command 95-105% of asking or higher. The 85% rule applies to average market conditions—not seller's markets with bidding wars.

Quality of earnings reports consistently find discrepancies:

If a business valued at $250,000 EBITDA actually shows $200,000 after QoE, that's a 20% price reduction.

Working capital adjustments typically swing $20,000-$50,000 on a $1M deal. Parties estimate at signing, then true-up 60-90 days post-close based on actual balance sheet figures.

Most buyers overpay because they underestimate retrade probability.

According to M&A advisors, 20-30% of deals get renegotiated after the Letter of Intent. Common triggers: customer concentration, key employee risks, equipment condition, unfavorable lease terms, compliance gaps.

Each discovery creates negotiating leverage for buyers.

Under $500K: 15% discount (first-time buyers, tight financing)

$500K-$2M: 10-14% discount (SBA buyers, more sophistication) — See our guide on efficient SBA capital stacks

$2M-$5M: 8-12% discount (serial entrepreneurs, small PE)

$5M-$50M: Often at or above asking (strategic buyers, auctions)

The pattern: smaller business = larger discount.

A business listed at $600,000 with $240,000 SDE (2.5x multiple)?

Budget for $510,000-$540,000 actual purchase price.

A marketing agency lists at $600,000 (2.5x SDE). During due diligence, the QoE identifies $35,000 in non-recurring add-backs and finds owner salary was $40,000 below market. Adjusted SDE drops to $205,000. Working capital true-up reveals $15,000 shortfall. Final price: $527,500 (88% of list, 2.6x adjusted SDE). Buyer saved $72,500 through proper diligence.

A $20,000 QoE engagement identifies $100,000+ in valuation adjustments on a $2M deal. That's 5x ROI minimum.

Structure offers with contingencies tied to findings upfront—not nickel-and-diming after commitment.

Most sellers lose money because they assume buyers won't find the flaws.

Want to net 2.5x SDE? List at 2.8x-3.0x.

Businesses closing near asking share three traits: CPA-prepared accrual financials, proactive disclosure of issues, and professional M&A representation. IBBA data shows businesses sold without advisors earn 31% less than those with representation.

The planning gap: 90% of sub-$500K business owners do zero formal planning before going to market. That shows up in the final price.

BizBuySell's Q3 2025 data shows:

Volume: Up 8% YoY (2,599 closed deals)

Prices down across the board:

Seller sentiment: Dropped from 50 to 48 (0-100 scale)—below neutral.

More businesses are selling, but for less. This softening amplifies the list-to-close discount because buyers retrade more aggressively in flat or declining markets.

✓ Budget for 85% of list price as real number (unless hot sector)

✓ Order QoE engagement early in process

✓ Structure contingencies tied to findings

✓ Expect $20K-$50K working capital adjustments

✓ Don't fall in love with the listing price

Small businesses in the 2-4x SDE range close at approximately 85% of asking price. This has held true for 30+ years.

The exception: Essential services and supply-constrained sectors where multiple buyers compete. In those markets, it’ll depend on the deal dynamics.

Businesses trading at the high end of ranges aren't lucky—they're well-run, properly prepared, and honestly presented. Everything else sells at a discount.

The data is clear. The variable is your preparation.

Want to go deeper? Check out our guides on SBA loan structures, quality of earnings analysis, and valuation methods every searcher should understand.

Disclaimer: This guide is for educational purposes only and does not constitute legal, financial, tax, or investment advice. Business acquisitions involve significant risks, and outcomes can vary widely based on individual circumstances. Always consult with qualified professionals including attorneys, CPAs, and financial advisors before making acquisition decisions. The EBIT Community does not guarantee the accuracy of information provided or the success of any acquisition strategy. Past performance and examples do not guarantee future results.