Purpose
The FundBizPro Acquisition Cost Index provides market orientation data for prospective small business buyers. It is designed to help buyers understand what businesses in different categories typically sell for, what multiples are applied to Seller's Discretionary Earnings (SDE), and what financing structures are commonly used — before engaging a broker or lender.
This is educational reference data, not a formal business valuation. Any specific acquisition should be valued by a qualified business appraiser or business broker using the seller's actual financials.
Primary Data Sources
- BizBuySell Insight Reports (Q3–Q4 2024): Quarterly reports on US small business transactions, median sale prices, and revenue multiples across business categories. BizBuySell is the largest online marketplace for buying and selling small businesses in the US.
- IBBA Market Pulse (Q4 2024): Survey of business brokers on deal activity, financing structures, time to close, and deal flow trends. The International Business Brokers Association (IBBA) publishes this quarterly.
- SBA Office of Advocacy: SBA loan program data on approval rates by industry, average loan size, and industry-specific eligibility notes.
- Industry-specific associations: Coin Laundry Association, American Trucking Associations, ADA Health Policy Institute, National Restaurant Association — each publishes sector-specific financial benchmarks cited in the relevant detail pages.
Key Definitions
- Median Acquisition Price
- The midpoint sale price from transactions reported in BizBuySell and IBBA datasets for the given business category. Half of transactions in that category closed above this price; half closed below.
- Seller's Discretionary Earnings (SDE)
- Net income plus owner's compensation (salary + benefits), plus any non-cash charges (depreciation, amortization), plus one-time or non-recurring expenses. SDE represents the total economic benefit to a single owner-operator.
- SDE Multiple
- Acquisition price divided by SDE. A business selling at $300K with $100K SDE has a 3.0x multiple. The range reflects the spread of actual transactions in the dataset.
- Loan-to-Value (LTV)
- The percentage of the acquisition price that lenders are willing to finance. An 80% LTV on a $200K acquisition means the lender contributes $160K and the buyer provides $40K.
- DSCR (Debt Service Coverage Ratio)
- Annual net operating income divided by total annual debt service (principal + interest). SBA lenders typically require ≥ 1.25x. Values shown are averages from reported closed transactions.
- SBA Eligibility Rate
- Estimated percentage of transactions in this category that used SBA financing (7(a) or 504), based on IBBA broker survey data. Not all businesses in a category are individually SBA-eligible; this is a category-level approximation.
Scope and Limitations
- Geography: Data reflects US national medians. Regional markets vary significantly — California, New York, and Texas businesses trade at higher multiples than rural markets in most categories.
- Business size: Data covers transactions predominantly in the $50K–$2M range (main street and lower middle market). Large transactions (>$5M) are not represented.
- Data lag: Published industry reports typically reflect transactions 6–12 months prior to publication. Current market conditions may differ.
- Sample bias: Reported transactions skew toward broker-facilitated deals. Private off-market transactions are underrepresented.
- Not a valuation: These figures should not be used to value a specific business. A qualified business appraiser or business broker using the seller's actual financial statements is required for any real acquisition.
Update Schedule
The index is reviewed annually. Next scheduled update: Q1 2027, incorporating BizBuySell and IBBA full-year 2025 data.