A 24-month walkthrough of buying a $2.5M services business using 11 tools from the Baratelli Institute library — from first thoughts of acquisition through Year 1 operating. The companion arc to The Sale Journey.
You are a 45-year-old industry executive (not the founder; the BUYER) leaving a corporate VP role to acquire your own business. You have $400K cash for equity, $200K of personal real-estate equity for SBA collateral, FICO 740, and 15 years of relevant industry experience. Your business broker shows you a $2.5M services business with $650K SDE. You can't make the deal work without the math. The library walks you through it.
Your broker says the seller is asking $2.75M. Is that reasonable? The Deal Multiples tool gives you the EV/EBITDA range for services businesses your size. If the asking price is above the 75th percentile, you have negotiating room. If it's below the median, walk fast — there's likely something wrong with the business.
Most first-time buyers submit an LOI, then discover the bank won't fund it three months later — wasting time and damaging the relationship with seller. Run the underwriting BEFORE you sign the LOI. The SBA Financing tool runs the 5 tests every PLP lender will run: business DSCR (1.25x min), global DSCR, equity injection (10% min), LTV, collateral. Pass all 5 = the deal will fund. Fail any = restructure before submitting.
Your seller wants stock sale (single LTCG layer). You want asset sale (basis step-up = present value of future depreciation deductions). The Asset vs. Stock Sale tool computes the buyer's step-up benefit, the seller's tax cost under each structure, and the optimal §338(h)(10) gross-up math that makes both sides whole. Walk into the negotiation with the math; you'll get a better deal.
The LOI says "delivered with normalized working capital." The seller's number? $400K. Your number? $250K. The difference goes off the purchase price dollar-for-dollar. The Working Capital Peg tool runs the 12-month TTM analysis with normalizations (one-time AR concentration, vendor-term changes, deferred-revenue-as-debt treatment), seasonality adjustment, and closing-month exposure. The right peg saves you $50-200K of cash you don't leave in the business.
The seller's CPA tells you "we have $4M of NOLs you'll inherit — that's $1M of tax savings worth, knock $1M off the price you pay." Wrong. §382 limits how fast you can use pre-change NOLs. The §382 NOL tool runs the limitation = FMV × IRS LT rate, NUBIG/NUBIL adjustment, and 20-year run-out. PV of usable NOLs is typically $200-400K, not $1M. Use the math to negotiate the right price.
A bank will fund based on SDE → CADS (after replacement comp + capex). But operating the business is different — you need to model actual cash flow under YOUR ownership (different owner-comp draw, different capex priorities, different working-capital practices). The CFO Engagement Profitability tool models the post-close operating math at the engagement / customer level so you walk in knowing which clients drive profit and which drag.
By now you've negotiated the §338(h)(10) gross-up, lowered the WC peg, and adjusted for NOL value. Re-run the SBA underwriting with the final deal terms. Did the bank pre-approval still hold? Are there new diligence items that affect DSCR? Most deals fail or get repriced in the last 60 days; running the underwriting fresh prevents the surprise.
You leave the corporate VP job and lose its group health coverage. The business has 18 W-2 employees with their own group plan that may or may not transfer cleanly. The Employer Health Insurance Strategy tool runs 7 strategies (group, level, self-funded, QSEHRA, ICHRA, stipend, no-plan-wages) with §4980H ALE penalty math, IRMAA awareness, and 2% S-corp shareholder treatment. Day-one decision; the wrong strategy costs $20-80K/yr.
90 days post-close, you have actuals to compare against your model. The Three-Statement Quick-Builder lets you re-run the projection with Q1 actuals plugged in. Income, balance sheet, and cash flow tie out by accounting identity. If cash is below plan but income is on plan, you have a working-capital problem. If income is below plan, you have a revenue or margin problem. The cash flow statement tells you which.
Last year you got a W-2; this year you're a pass-through owner. Your taxes are now your problem to estimate quarterly. Plus you need to evaluate PTET — most states' new SALT-cap workaround that converts $10K-capped state SALT into uncapped federal deduction. For a CA owner with $500K of pass-through income: ~$17K/yr in federal savings. Most CPAs are still missing this for new clients.
A competitor reaches out: their owner is retiring, they want $800K SDE for $3.2M (4x). Your platform is stable; cash flow is strong. Should you add? Run the same Deal Multiples + DCF Sanity + WACC analysis on the add-on. If it pencils, the SBA can finance it (you're now an established borrower with a clean payment history). The library scales with you — same tools, same arc, second deal.
Your commission depends on the buyer closing. The buyer closing depends on the SBA loan funding. The SBA loan funding depends on the buyer's structure clearing the underwriting. Your buyers are most likely to close when they\'ve done the homework — when they understand DSCR before they sign the LOI, when they\'ve negotiated the right WC peg, when they know the true value of the seller\'s NOLs. The Buyer Journey is the homework, made approachable. Buyers who run it look more competent to lenders, sellers, and you. Hand it to your pipeline as your standard buyer-onboarding handout. Talk to the Institute about a brokerage partnership →
The Sale Journey shows the seller side; this shows the buyer side. Together they cover both halves of every M&A transaction. Same tools, different sequence, different audience, identical depth.