Frequently Asked Questions

Selling a Business

How much is my business worth?

Most privately held businesses in the lower middle market are valued as a multiple of adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, adjusted for owner compensation and non-recurring expenses). In Sun Acquisitions’ experience across more than 500 transactions, businesses in this segment commonly sell between 3x and 7x adjusted EBITDA. Where a specific business falls in that range depends on industry, growth trajectory, customer concentration, management depth, revenue quality, and buyer demand. A professional valuation (such as Sun Acquisitions’ Market Value Analysis™) identifies both the realistic range and the specific factors driving your position within it.

How long does it take to sell a business?

A typical sell-side engagement takes six to twelve months to close. The timeline breaks down roughly as: One month of preparation (financial review, market value opinion, marketing materials), two to three months of confidential marketing and buyer negotiation, and two to three months from signed letter of intent through due diligence to closing. Businesses with clean financials, diversified customers, and strong management teams tend to move faster; complex or poorly documented businesses take longer.

How do I sell my business without employees or competitors finding out?

Confidential sale processes use several protective mechanisms: a blind profile that describes the business without identifying it, non-disclosure agreements signed by every prospective buyer before any identifying information is shared, buyer screening to filter out competitors seeking intelligence rather than an acquisition, and controlled release of sensitive information in stages as buyers demonstrate seriousness. A properly managed process keeps the sale invisible to employees, customers, and competitors until the owner chooses to announce it — typically at or near closing.

What does a business broker or M&A advisor charge?

Most lower-middle-market M&A advisors work on a success-fee basis, earning a percentage of the transaction value when the deal closes. Fee structures vary by firm and deal size. Sun Acquisitions works on a success-based fee model, which means compensation is contingent on the successful closing of the transaction. When evaluating advisors, ask about total fees, what services are included, engagement terms, and whether any fees are payable if the business doesn’t sell.

Should I sell my business myself or hire an advisor?

Owners who sell without professional representation face three structural disadvantages: single-buyer negotiations produce lower prices because the buyer faces no competition; confidentiality is difficult to maintain without an intermediary screening inquiries; and the legal, tax, and financial complexity of purchase agreements frequently exceeds an owner’s experience. Most business owners sell a company once in their lifetime, while the buyers they negotiate against often acquire businesses professionally. A competitive process run by an experienced advisor consistently produces higher prices and better terms than self-representation.

When should I start preparing to sell my business?

Ideally one to three years before your target exit date. This window allows time to address the factors that most affect valuation: cleaning up financial records, reducing customer concentration, building management depth so the business is less dependent on the owner, documenting operational processes, and resolving any legal or tax issues that would surface in due diligence. Owners who begin preparing early routinely achieve meaningfully higher sale prices and lower tax burdens than those who go to market unprepared.

What is the difference between selling to a strategic buyer and a financial buyer?

A strategic buyer is a company in your industry or an adjacent one that acquires your business for synergies: customer relationships, geographic expansion, product lines, or capabilities. Strategic buyers can often pay premium prices because the acquisition is worth more to them than the standalone cash flow. A financial buyer, such as a private equity group or individual investor, acquires your business primarily for its earnings and growth potential. Financial buyers typically focus heavily on EBITDA quality and often want existing management to stay on. Which buyer type produces the best outcome depends on your business and your goals, which is why buyer research is a core step in a professional sale process.

Will I have to stay involved after selling my business?

Usually, yes, at least for a defined period. Most transactions include a transition period ranging from 90 days to a year, during which the seller trains the buyer and transfers relationships. Some deals include longer consulting agreements or earnout structures that tie part of the purchase price to post-sale performance, which extends the seller’s involvement. The length and terms of your transition are negotiable deal points, and your preferences should be established at the start of the process.

What taxes will I pay when I sell my business?

The tax impact of a business sale depends on your entity type, the deal structure (asset sale versus stock sale), the allocation of the purchase price across asset classes, applicable federal and state capital gains rates, and potential depreciation recapture. The difference between a well-structured and poorly structured deal can amount to hundreds of thousands of dollars in after-tax proceeds. Sun Acquisitions coordinates with your CPA or financial advisor during the deal structuring phase so you understand your take-home number before accepting any offer.

Buying a Business

How do I find a business to buy?

Businesses for sale surface through three channels: public listings on business-for-sale platforms, intermediary networks where M&A advisors share deal flow, and proprietary outreach, which is direct, confidential contact with owners who haven’t listed their businesses but may be open to the right offer. Many of the highest-quality acquisition opportunities never appear on public platforms. Buy-side advisory services like Sun Acquisitions’ Business Acquisition Solution™ combine database research with direct outreach to surface both listed and off-market opportunities matching a buyer’s criteria.

How do I know if I’m paying a fair price for a business?

A fair price is grounded in the business’s adjusted EBITDA, comparable transaction multiples for its industry and size, the quality and sustainability of its earnings, and its specific risk factors. Lower-middle-market businesses commonly trade between 3x and 7x adjusted EBITDA. Buyers who don’t independently verify the seller’s earnings adjustments, benchmark against comparable transactions, or account for risks like customer concentration frequently overpay. An independent opinion of value before making an offer is the primary protection against overpayment.

How are business acquisitions financed?

Most lower-middle-market acquisitions use a combination of financing sources: SBA 7(a) loans (for transactions up to $5 million in loan amount), conventional bank financing, seller financing (where the seller carries a note for part of the purchase price), and buyer equity. For larger deals, conventional bank financing, balance sheets, stock and lines of credit are deployed.  In these instances, the buyer is typically a larger strategic or well-funded Private Equity Group.  A typical structure might combine a bank, a seller note, earnout, and a buyer down payment. Seller financing is common in this market because it signals the seller’s confidence in the business and bridges valuation gaps.

What is due diligence when buying a business?

Due diligence is the buyer’s verification period after a letter of intent is signed, typically lasting 30 to 90 days. The buyer and their advisors review financial statements and tax returns, customer and supplier contracts, employee agreements and benefit obligations, legal and regulatory compliance, operational systems, and the assumptions behind the seller’s earnings adjustments. Issues uncovered in due diligence can lead to price renegotiation, restructured terms, or a terminated deal. Professional coordination of due diligence (keeping document flow organized and resolving issues quickly) is often the difference between a deal that closes and one that dies.

Should I buy a business or start one?

Buying an existing business acquires proven cash flow, existing customers, trained employees, and established operations. Yet this comes at a price. Starting a business costs less upfront but carries substantially higher failure risk and a multi-year path to profitability. For buyers with access to acquisition financing, purchasing an established profitable business is frequently the faster and lower-risk path to business ownership. The economics depend on the acquisition multiple paid versus the cost and risk of building equivalent cash flow from zero.

Working with Sun Acquisitions

What size businesses does Sun Acquisitions work with?

Sun Acquisitions works with privately held businesses between $2 million and $75 million in enterprise value, across sell-side advisory, buy-side advisory, business valuation, and due diligence engagements. The firm has completed more than 500 transactions since Managing Director Domenic Rinaldi acquired it in 2005.

What industries does Sun Acquisitions serve?

The firm has completed transactions in manufacturing (including metal fabrication, CNC machining, and packaging), food production and distribution, healthcare and home care services, construction and specialty trades (HVAC, plumbing, remodeling), transportation and logistics, technology and IT services, business services, hospitality, environmental services, and consumer products, among others. Individual advisors bring sector-specific depth. For example, food industry expertise from executive roles at Sysco and Restaurant Depot.

Does Sun Acquisitions work outside of Chicago?

Yes. The firm is headquartered in Chicago at 8745 W. Higgins Road and serves clients nationwide, with additional cross-border transaction experience. Buyer outreach in sell-side engagements is national and, where appropriate, international.

What is the first step if I’m considering selling or buying?

A confidential, complimentary consultation. For sellers, the conversation covers your goals, timeline, and a preliminary discussion of value based on available financials. For buyers, it covers your acquisition criteria, financing capacity, and search strategy. There is no commitment, and all information is held in confidence. Contact Sun Acquisitions at (773) 243-1603.