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Don't be afraid to try what you're not qualified to do.
If I only did what I was qualified to do, I'd be pushing a broom somewhere.
-Sacca
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Mike Botkin
24.7K posts
Mike Botkin
@MikeBotkin_
Canvas Outdoors. Previously exited a commercial service rollup.
Orlando, FL Katılım Haziran 2012
473 Takip Edilen17.2K Takipçiler
I was referring specifically to the deals Matthias has done. I’m asking if he’s followed up with the guys he did deals with. I’m curious what years 1-3 are like in the new environment. Everyone I’ve spoken with who has taken an SBA loan in the last 3 years falls into two buckets: either their business hit a massive growth spurt(kinda unexpectedly), or they are month-to-month (or week-to-week) on all payables.
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@MikeBotkin_ @SBA_Matthias I lament often that the SBA data we have is 5-10 years old.
We have NO idea how loans from 2023-2025 are doing & won't for several years.
PE returns are captured in "vintage years" = the year they were bought. We don't have that data in Search.
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The Honest Truth About Buying a Business with SBA Financing in 2026
I want to share what I’m actually seeing on the ground right now because I think a lot of people need to hear this.
We broker SBA loans for acquisition entrepreneurs at Pioneer Capital Advisory. We’re in the trenches on these deals every single day. And candidly, the market has shifted in ways that would have been hard to imagine even 18 months ago.
Let me give you a real example.
One of our buyers recently submitted an LOI on an electrical services company at $4.6 million. That was already $300,000 above the asking price. His offer came back as the lowest out of 11 total offers. The top six bidders were in the $5.3 to $5.7 million range. His exact words to me were “it’s wild out there.” He’s right.
That’s not an outlier. That’s the new normal.
Here’s what I’m seeing from a deal structure standpoint across our active pipeline:
Multiples have pushed higher than most buyers expect going in. We had a home health deal come across at 5.0x SDE and the lender actually called that valuation “defensible.” A year ago most lenders would have pushed back hard on anything above 4x in that space. The DealStats median EBITDA multiple for comparable industries is sitting at 4.62x right now. Quality businesses with clean books and recurring revenue are trading well above that.
The competitive LOI process has become the standard, not the exception. Brokers are collecting offers and presenting all of them to the seller simultaneously. We’ve had buyers lose deals to strategic and industry acquirers who already have relationships with the seller. If you’re a first time buyer going up against someone who already owns three locations in the same vertical, you need to understand what you’re walking into.
Earnest money is a whole different conversation now. We’re seeing sell side brokers require 1% to 2% deposits just to enter exclusive due diligence. One deal required the deposit within five business days of LOI execution. Another required a 2% escrow deposit before the seller would even grant exclusivity. Some brokers are running a “first to go hard wins” process where the buyer who converts their refundable deposit to nonrefundable first gets the deal. That’s a meaningful amount of capital at risk before you’ve even completed diligence.
The capital stacks on these transactions are getting more creative out of necessity. I’m seeing deals structured with 80% SBA financing, 10% seller equity rollover, 5% buyer cash equity, and 5% forgivable seller notes tied to performance metrics like customer retention. Buyers who show up with a clean, thoughtful structure and a lender who already understands the business are winning. Buyers who go direct to nine different banks and burn through relationships are not.
From a volume standpoint, our team ran 51 meetings last week alone. We have 4 deals under LOI and 34 in the pre LOI pipeline right now. The deal flow is there. The demand is there. But the margin for error on execution is razor thin.
So what does all of this mean if you’re trying to buy a business with SBA financing in 2026?
It means you need to move fast, structure smart, and have your lending relationship locked in before you submit that LOI. It means you should expect competition on anything worth buying. It means earnest money is real and it’s going to be part of the conversation earlier than you think. And it means that the days of getting a quality business at 3x with minimal money down are, for the most part, behind us.
I’m not saying this to discourage anyone. Acquisitions are still one of the best paths to business ownership and wealth creation. But I think the community deserves an honest picture of what the landscape actually looks like right now.
If you’re in the market, go in with your eyes open.
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Doing the South Florida to Central Florida route as the opening, was a miss.
Having the Central Florida route start/stop point be the airport vs another destination with easier routing, was a miss.
A route from Orlando (closer to Disney) to Tampa would have been amazing, especially if it is faster than I4.
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Hard truths about private equity that operators need to hear:
1/ "Roll-ups" are not strategy. They're just buying revenue with debt and hoping the synergies show up.
2/ The 100-day plan is a fantasy. The first 100 days are spent figuring out what you actually bought.
3/ Your operating partner has never run a P&L of any size. They were an associate two jobs ago.
4/ EBITDA is not cash. The number you bought on and the number that pays the debt are different numbers.
5/ "Add-backs" are how a $2M EBITDA business gets sold as $4M. Half the industry is built on this.
6/ The portfolio company CEO has a 3-year clock from the day they're hired. Everybody knows it. Nobody says it.
7/ The best PE returns came from buying cheap in the 2010s and riding multiple expansion. That game is over and most firms haven't admitted it yet.
Fight me.
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The book American Icon by Bryce Hoffman, goes into his story and the turnaround. Fascinating book.
Highly recommend the book or at least watch this.
andrew engler@aerockrose
In 2011, Ford CEO Alan Mulally gave a 52-min masterclass on leading a turnaround when everything is broken. He walked into a company losing $17B a year. His frameworks: - The data sets you free - One Ford, not 97 distractions - Weekly truth-telling at 7 a.m. 12 lessons:
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@OneManLBO Yeah, I didn’t even mention licensing and operating issues.
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Re: greenfielding resi home services in large metro areas
Agree with Mike here wholeheartedly
To get to scale, it takes:
1) tons of $$$ in ad spend to “buy brand awareness” (major player here in town spends millions on ads for new local greenfield, and he has experience)
2) a local technical operating partner - you get crushed if you’re just a money guy raising funds. Need infra and lots of local relationships
Seems super daunting to me. And so hard to differentiate. Everyone has the “nice smiling tech in a polo with pex pipe who takes his shoes off”
Mike Botkin@MikeBotkin_
You think you are in residential home services but, the business you are actually in is digital marketing and brand engagement. I don’t give a shit if you are the creme de la creme of operator. If you aren’t top tier in digital marketing and brand engagement, take the $ and light it on fire. You have no brand. No name. No search history. No equitable value to any consumer. You have to either create it 1:1 and take years to accomplish, or, you have to spend your way to it. Usually with a lot of things that have low (or hard to track) ROI. (I.e., billboards, radio ads, mailers, etc.) Starting from 0 is playing Russian roulette with money, especially if you have a short time horizon.
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You think you are in residential home services but, the business you are actually in is digital marketing and brand engagement. I don’t give a shit if you are the creme de la creme of operator. If you aren’t top tier in digital marketing and brand engagement, take the $ and light it on fire.
You have no brand. No name. No search history. No equitable value to any consumer.
You have to either create it 1:1 and take years to accomplish, or, you have to spend your way to it. Usually with a lot of things that have low (or hard to track) ROI. (I.e., billboards, radio ads, mailers, etc.)
Starting from 0 is playing Russian roulette with money, especially if you have a short time horizon.
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@MikeBotkin_ Makes sense - is it just a function of ad spend going way up in densely populated areas or is there more to it?
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At this point I’m not sure how buying vs building makes sense in the home services space unless you’re an incumbent who has some sort of edge. Feels like raising $1-2MM for greenfield play makes more sense. Could grow to $1MM EBITDA and get 4-5x MOIC in under five years.
TK@sourcesandmuses
Winning LOI for the $1m EBITDA resi plumbing business was 9.5x… … I was not quite there to say the least
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Not to be that guy but, you need to put “hypothetically” or something in your post. I am 99% sure it’s against SEC Reg D.
@SMB_Attorney would know better.
To answer your post tho, credit funds would be your best bet, and wouldn’t care about some of the items posted whereas an IS or PE firm will not allow you to continue to post financials or inside information on the company (you suing a former seller) etc. if that matters to you.
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Would anyone be interested in an equity position in Lindley Home Services?
About to close deal #11 that will put us around 4.5MM EBITDA and still have 2 more deals in the pipeline that will carry us to 6MM+.
Proceeds would be used to take some chips off the table and fund future projects.
I believe we can get to 20MM EBITDA in 24 months.
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@WilsonCompanies Understanding a) unit economics, and b) division economics, helped us make the decision to drop (voluntarily stop servicing) residential clients that equaled millions of dollars in recurring revenue.
Don’t throw good labor after bad money.
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80% of your profit comes from 20% of your work.
Audit profit by department. Cut what drags. Double down on what works.
That’s how you grow faster and make more money.
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@JackieHirsch_ Your CIMs are great. You and @BizBrokerLee are very informative and responsive(key!). It helps me get to quick Yay/Nay on opportunities that your firm shares with me, which I hope is beneficial to the other side.
I appreciate you guys including me.
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There are several reasons brokers/bankers don’t send a CIM automatically when you sign the NDA. (In response to deep conversation below)
Brokers/Bankers should be heavily vetting Buyers!
1. Just because someone signs an NdA, doesn’t mean they are qualified to see the deal. A good broker is heavily vetting buyers.
2. The broker fee agreement and the LOI are conflicting. Fee agreement states broker may need to keep business on the market and visible, and will even mark as pending, and still get a ton of interest if the deal is compelling. LOI says Buyer has exclusivity. However those emails and contacts are filtering in to Buyer CRM. In the event the deal doesn’t move forward, there are a pile of Buyers to contact. The broker isn’t speaking to these buyers during exclusivity.
3. Agnostic. When I hear someone say they are agnostic, to me it says unfocused, no direction, no thesis. And I’m not saying you have to have a formal Ivy League thesis…but on some level you know if you can do a job and run a company. I was at SMBash but may have missed this part of a presentation. While anyone can buy a business, buying a business isn’t for everyone. I personally look at everyone’s website and LinkedIn who signs an NDA whether they are inside a process or on the open market.
4. I recently spoke with an Independent Sponsor who said they had 200 capital providers. To me that sounded fake. We decided to not show them the book. I’m doing a deal with an IS right now. It always takes longer to close…at least twice as long if not more.
5. To me a good Independent Sponsor was an investment banker or worked deeply in private equity and operated or was very involved in a certain niche. They have a handful of true financial backers. They have a team in place. They know the playbook.
Multiples are high.
Buyers are everywhere. Brokers have to seriously vet Buyers to see who can do a deal. In our process, just because you sign the NDA, doesn’t mean you automatically receive the CIM.
@OneManLBO is welcome to see any CIM we have. @MikeBotkin_ has seen our CIM’s. @paulswaney3 is welcome to see our deals. We try to be open minded to Buyers. But I often don’t want to work with a buyer who wants to look at 40,000 companies. We’re getting some other interesting companies. @BigJohn043 send DM your criteria. I’d love to see it.
John Caple@BigJohn043
This looks directionally right to me. Not sure why you don't get a CIM for every NDA you sign but whatever. We also sign about half the LOIs we submit. But you have to kiss a lot of frogs. Not sure this means you can't do a geo search. It just has to be somewhere like Atlanta with some willingness to go to nearby cities like Augusta, Macon, etc....
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Wild that this is even a story. It's very common, if not standard.
Heck, even LMM PE firms give CEO's the ability to take out loans.
The New York Times@nytimes
Elon Musk has used SpaceX as a kind of piggy bank over the last two decades, turning to the company as a financial tool to get loans and bolster his struggling companies, according to an examination by The New York Times. nyti.ms/4w8dInZ
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@OneManLBO If this is from an individual - then they are doing this for ‘clicks’/reactions. Zero percent chance somebody actually did that stuff, or if they did, they need to go outside and touch some grass and think through what they truly want and have more focus.
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Apparently the below was a deal funnel shared by a presenter at SMBash this week
(Wasn’t there, but someone posted this on Searchfunder)
She may as well have saved herself a a bunch of work and given the audience the punchline:
“If you’re doing a geo search, you’re DOOMED.
GOOD LUCK scanning 28,000 businesses to find the perfect one in Omaha, Nebraska!”
I mean, come on… BizBuySell has something like 40,000 listings at any given time.
We know this stuff is hard, but it can’t be that hard, right
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I don't have a problem with management co-investing.
Geiger Capital@Geiger_Capital
I think US Special Forces should be able to bet on themselves completing their mission.
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Number one theme from SMBash 2026 for me: it is objectively harder to get deals done, and deal quality is going down.
To paraphrase Jacob Hall: The self-funded search playbook of 2019-2021 no longer works.
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When I used to run Heinz Ketchup I was always pushing to do "lifetime supply" promos.
It's brilliant bc of the massive gap between customer excitement and actual cost to the company.
People would FREAK OUT after winning a lifetime supply of ketchup. You'd think they won the lottery.
Usually it just ends up being a large gift card. For a lifetime supply it'd only be ~$500-$1K. And that's retail, not product cost (true cost to the co).
An even easier promo almost any biz can run is "a year's supply of X".
Customers still freak out and the cost is quite low, esp relative to other marketing tactics.
If you build a solid campaign around "Free X for a Year" promise you'll get great engagement.
Ketchup is great bc it's a low ticket item. A year's supply of Heinz Ketchup is like $50 retail. 😂
Highly encourage you to give it a try if it makes sense for your biz.
Courtney Cronin@CourtneyRCronin
Because he was drafted with the 57th overall pick, Logan Jones will receive a lifetime supply of ketchup from The Kraft Heinz Company. Jones didn't know the incentive of his draft slot until informed on a zoom minutes after being selected. "I love it! I'll take as much as I can get ... Let’s go ketchup!"
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@guessworkinvest Oh, and the people who keep trying to champion these deals…all appear to have incentives to. Brokers, loan coordinators, etc.
The people who have to live with the risk/reward of these deals, that have done this before, all think they are too expensive.
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I think people are missing the point of your post, or maybe I am.
Are deals out there? Sure.
Are they quality? Beauty is in the eye of the beholder.
My problem is they may pencil to “get it done” (a stretch, in my view), but buying these SBA-level deals is significantly riskier today than 3-4 years ago.
In my opinion, what was 3x in 2020-2022 is now 5-6x. What is 3x today wasn’t even considered for purchase back then due to quality and characteristics.
Just because you can buy it doesn’t mean you should.
I hope I’m wrong, but I think we’ll see a graveyard stemming from people buying lower-quality businesses in the last 24 months with PG debt at high leverage and the post-close value creation never happened.
A wise man once said….’all the fools ain’t dead’ and ‘paper doesn’t refute ink’
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