How to Know if You're Overpaying for Your Business

This Week in ETA:

Searchers: If it feels like self-funded search is getting more competitive, that’s because it is. The number of searchers continues to rise each year as more people discover ETA. While that can feel discouraging, we see it as an opportunity: competition pushes searchers to be more creative in how they source deals and to differentiate themselves from private equity through a genuinely “human-first” approach. Clarity of thesis also matters. Being clear about what you’re looking for—while staying flexible in how you find it—can set you apart from searchers who are either kicking tires, boiling the ocean, or locked into an overly narrow buy box. If you’re new to search, this list of questions is a good place to start. I’d add one more: Are you willing to exercise real grit and fortitude when your search takes longer—or gets harder—than you expected?

Investors: Off-market deals can be rewarding but without broker-provided documents, pre-LOI diligence is critical. When I attended a workshop with acquisition expert Peter Lang, he highlighted some of the most important questions to ask of an off-market seller. My takeaways: 1/ Focus on what truly drives the business — revenue streams, growth projections, customer history, and how the sales team performs. 2/ Understand working capital needs, investment requirements, and material contracts, while also considering IT systems that keep operations running. 3/ Traditional diligence — accounting, legal, tax, insurance, and ownership — still matters. Thoughtful pre-LOI conversations like these uncover risks and opportunities, giving investors the insight they need to move confidently on deals that aren’t publicly marketed.

Partner Perspective: Caleb Basile, CPA - QoE Prep

Ever wondered whether you’re paying too much for a business? This 60-second video from Caleb at QoE Prep zeroes in on one of the smartest questions any buyer can ask — and why a quality-of-earnings review is your first line of defense before writing a check.

Plus:

• Lawyer fees can be overwhelming when you’re already financially investing in a search. But what’s even more costly? Not having a great M&A lawyer. What you and your company gain financially from hiring an excellent lawyer > what you pay that lawyer.

• Engage lenders and loan brokers early in your search. We recommend Matthias Smith at Pioneer Capital Advisory; his team will help you understand your options and not waste time and money.

Question:

Hit reply and tell us - If you successfully acquired a business through the ETA path, how long did it take you from start of your search to close?