Before You Buy or Sell a Business

Jared W. Johnson
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  • Entrepreneurship

Learn everything you need to know about buying and selling a business from High-Performing SBA Lender, Jared Johnson, who specializes in business acquisitions. Jared interviews industry experts on both the buying and selling side to provide insights into the buying and selling process. Experts include brokers, attorneys, escrow officers, and seekers. You'll also hear from actual buyers and sellers about their experiences before and after the process. If you're a buyer or a seller or thinking about becoming one at some point in the future, this is the podcast that will provide you with the information you need for a successful transaction.

  1. 2d ago

    What It's Taken To Build A Successful Career in SBA Financing | Jared Johnson on A Coleman Conversation

    In this episode of Before You Buy or Sell a Business, we're sharing a conversation originally recorded for A Coleman Conversation, where Jared Johnson joins the show to discuss his career in SBA lending, the growth of entrepreneurship through acquisition, and what it takes to build a successful career financing business acquisitions. Jared shares how he entered the SBA lending industry while finishing school, eventually moving into SBA 7(a) lending and discovering business acquisitions around 2010 and 2011. Over the years, he's developed a specialty in financing acquisitions for buyers transitioning from professional careers into business ownership, particularly transactions in the $3 million to $7 million purchase price range. The conversation explores how the business acquisition market has evolved and why Jared believes today's buyers are bringing more sophisticated approaches to evaluating companies. He discusses the importance of liquidity, debt service coverage, transferable management experience, and preparing buyers for the challenges that can arise after closing. Jared also explains why he approaches his role as more than simply getting loans approved, focusing instead on helping borrowers structure acquisitions that position them for long-term success. Jared also talks about his experience at First Internet Bank, where he's spent six years as a BDO. He discusses the importance of having a lender that understands acquisitions, building an experienced support team, and developing educational resources that help borrowers navigate the financing process. He also shares how consistency, work ethic, and years of experience have contributed to his career. The discussion turns to the possibility of increasing SBA loan limits to $10 million and what that could mean for business acquisitions in the lower middle market. Jared shares his perspective on the financing gap for larger acquisitions, the challenges buyers face when traditional SBA financing is insufficient, and the potential impact of expanded lending options on business ownership and employee retention. The episode concludes with Jared's advice for professionals entering the SBA lending industry. He emphasizes finding an area of specialization, becoming knowledgeable about the businesses and transactions you finance, maintaining strong credit standards, and protecting your reputation by prioritizing sound lending decisions. Whether you're considering buying a business, exploring SBA acquisition financing, or building a career in commercial lending, this conversation offers insight into the lending decisions, professional relationships, and experience that shape successful business acquisitions. Main Takeaways- How Jared built his career in SBA lending: Jared discusses his early experience at Enterprise Funding, his transition into SBA 7(a) lending, and how he developed a specialty in business acquisitions. - The growth of entrepreneurship through acquisition: Buyers from investment banking, private equity, consulting, and other professional backgrounds are increasingly pursuing established businesses, often targeting acquisitions between $3 million and $7 million. - What SBA lenders look for in acquisition borrowers: Jared explains why liquidity, cash reserves, debt service coverage, and transferable management experience are important when evaluating an acquisition. - Why financing should support long-term ownership: Jared discusses the importance of structuring acquisitions that borrowers can successfully operate rather than focusing exclusively on getting a loan approved. - How the buyer pool has evolved: Jared shares his observations about buyers applying more sophisticated due diligence and acquisition practices to lower-middle-market transactions. - The importance of lender experience and execution: A bank's appetite for business acquisitions, ability to manage transaction volume, and understanding of acquisition financing can affect the lending process. - Building a scalable lending process:Jared explains how his team, educational videos, and borrower resources help him manage transaction volume while maintaining personal relationships with clients. - The potential impact of higher SBA loan limits: Jared discusses the possibility of $10 million SBA loans and the challenges lenders may face in financing larger transactions. - The financing gap in the lower middle market: Buyers pursuing acquisitions beyond traditional SBA lending limits may need seller financing, outside investors, or more complex capital structures. - Why reputation matters in SBA lending: Jared emphasizes sound credit decisions, professional integrity, and developing expertise over years of consistent work. Episode Highlights- How Jared's cowboy hat became a recognizable part of his professional identity. - Getting started in SBA lending while finishing school. - Transitioning into SBA 7(a) lending around 2008 or 2009 and discovering business acquisitions shortly afterward. - Why Jared chose to specialize in financing established businesses. - His six-year tenure at First Internet Bank and the importance of working with a lender that understands business acquisitions. - Jared's estimate of approximately $850 million in career lending volume, including more than $500 million at First Internet Bank. - His estimate of approximately 350 transactions completed during his time at First Internet Bank. - The types of borrowers Jared typically works with, including professionals transitioning from corporate careers into business ownership. - Why buyers targeting $3 million to $7 million acquisitions often need to consider liquidity beyond their initial equity contribution. - How acquisition buyers have become more sophisticated in their approach to due diligence and transaction structuring. - Why Jared focuses on becoming a resource to borrowers rather than simply originating loans. - The importance of maintaining sufficient cash reserves to navigate unexpected challenges after closing. - How lenders evaluate debt service coverage and management experience when considering an acquisition. - The role of an experienced support team in managing loan applications, underwriting requirements, and borrower communication. - How Jared uses YouTube videos and other educational resources to help borrowers understand the SBA financing process. - Why personally sharing loan approvals with borrowers remains one of the most rewarding parts of Jared's work. - The work ethic and consistency required to build a successful SBA lending career over time. - How Jared balances a demanding professional schedule with family time, horses, and attending concerts. - What a potential increase in SBA loan limits to $10 million could mean for lenders and acquisition entrepreneurs. - The challenges of financing acquisitions in the $5 million to $15 million lower-middle-market segment. - Jared's perspective on the importance of retaining employees and institutional knowledge following an acquisition. - Why professionals entering SBA lending should develop expertise in a specific type of financing. - Jared's advice on protecting credit quality, maintaining ethical lending practices, and building a reputation that lasts. Connect with Jared JohnsonWebsite: https://jaredwjohnson.com LinkedIn: https://www.linkedin.com/in/jaredwjohnson/ Original Podcast CreditThis conversation was originally recorded for A Coleman Conversation and is being shared with the Before You Buy or Sell a Business audience. DisclaimerThe views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. KeywordsJared Johnson, The Coleman Conversation, Before You Buy or Sell a Business, SBA lending, SBA 7(a) loans, SBA business acquisition loans, First Internet Bank, business acquisition financing, entrepreneurship through acquisition, ETA, SBA lender, SBA business development officer, BDO, business acquisition, buying a business, buying an existing business, small business lending, SBA loan requirements, SBA loan underwriting, debt service coverage, DSCR, borrower liquidity, SBA loan eligibility, business acquisition due diligence, acquisition financing, lower middle market acquisitions, SBA loan limits, $10 million SBA loans, acquisition capital structure, seller financing, private equity, business ownership, SBA lending career, credit quality, commercial lending, business acquisition strategy, SBA financing process

  2. Oct 20

    From Software Engineer to Business Owner: Anthony Tokosky on Buying a $3.5M Business, SBA Financing Challenges, and Life After Closing

    Jared Johnson sits down with Anthony Tokosky, owner of Priority Doors and Windows and one of Jared's previous SBA lending clients, to discuss Anthony's experience acquiring a 45-year-old business in San Diego. Anthony shares how he transitioned from a 15-year career in software engineering to entrepreneurship through acquisition, influenced by growing up watching his parents build and operate restaurants after immigrating from China. He explains why he ultimately left his W-2 job to pursue business ownership, how he and his business partner Alex approached their search, and what it took to find and acquire a company outside their professional backgrounds. Anthony and Alex reviewed approximately 800 businesses, submitted 20 letters of intent, and had five or six accepted before ultimately closing on Priority Doors and Windows. Anthony explains how maintaining relationships with brokers, consistently reviewing listings, and moving quickly when opportunities appeared helped them access the business before it was publicly listed. They discuss the importance of having proof of funds, personal financial statements, buyer profiles, and a structured acquisition process in place so brokers and sellers recognize that a buyer is prepared to move forward. The conversation also covers the financial and operational characteristics that attracted Anthony and Alex to Priority Doors and Windows, including its established reputation, lean staffing model, made-to-order products, and customer payment structure. Anthony walks through how their initial offer of approximately $4.3 million ultimately became a purchase price of around $3.5 million following changes in business performance and findings from a Quality of Earnings report. Jared and Anthony discuss working capital, customer deposits, and the complexities of acquiring a company where payments are collected before products are delivered. They also explain how a lockbox arrangement helped address financial concerns during an extended closing process. One of the biggest lessons Anthony shares involves selecting an SBA lender. After initially pursuing financing with another bank that offered attractive terms, Anthony and Alex encountered problems when that lender could not complete the transaction. They ultimately transitioned to Jared's team, which helped them navigate the remaining challenges and close the acquisition. Anthony explains why he now believes a lender's ability to execute, experience with business acquisitions, and certainty of closing can be just as important as the financing terms themselves. Finally, Anthony shares what happened after closing, including his first 90 days learning the business, working with the previous owner, building relationships with employees, and identifying opportunities to improve operations. He discusses how his technology background helped the company modernize systems, reduce expenses by approximately $110,000 to $120,000, and invest in additional staff and employee resources. Jared and Anthony also reflect on the responsibilities that come with business ownership, the importance of earning employees' trust, and how Anthony's perspective on entrepreneurship has evolved as he prepares to become a father. Main TakeawaysBuying a business requires a consistent and organized search process. Anthony and Alex reviewed approximately 800 businesses and submitted 20 LOIs before completing their acquisition.Building relationships with business brokers can provide access to opportunities before they become publicly available, especially when buyers demonstrate that they are serious and prepared.Having a buyer profile, proof of funds, personal financial statements, and a clear acquisition strategy ready can help buyers respond quickly when a promising opportunity appears.Buyers should understand the operating model of a business before making assumptions about its industry. Priority Doors and Windows had several attractive characteristics, including limited staffing, no installation responsibilities, and no inventory purchased for resale.Quality of Earnings reports can uncover issues that materially affect an acquisition's valuation, working capital requirements, and purchase price negotiations.Acquisition timelines can extend well beyond initial expectations. Anthony's transaction took approximately nine months from the initial LOI to closing.Businesses that collect customer payments before delivering products require careful evaluation of customer deposits, liabilities, and working capital.A lockbox arrangement can help buyers and sellers manage cash movements, distributions, and financial expectations during an extended closing process.The lowest interest rate or most attractive SBA loan term sheet does not necessarily provide the greatest certainty of closing. Lender experience and the ability to execute matter.Buyers can lose an acquisition if their financing falls apart late in the process, particularly when sellers have other interested parties.The first several months after closing should include learning the business, understanding existing processes, and building relationships with employees before making major operational changes.Introducing new software and systems requires more than a technical implementation. Employee training, organizational culture, and changes in behavior are often the most challenging parts.Anthony and Alex identified approximately $110,000 to $120,000 in expense reductions while also investing in technology and additional employees.Owning a business involves responsibility for employees and their families, which Anthony describes as one of the most rewarding and unexpected aspects of entrepreneurship. Episode HighlightsAnthony's background growing up in San Diego and watching his parents build businesses after immigrating from China.How Anthony's mother went from working as a busgirl at a Chinese restaurant to eventually purchasing that same restaurant years later.Why Anthony's parents initially encouraged him to pursue a traditional professional career rather than follow them into entrepreneurship.Anthony's 15-year career in software engineering and his decision to leave his W-2 job in November 2024 to pursue a business acquisition.How Anthony and his partner Alex combined their experience in technology and real estate to establish their acquisition search criteria.Building a weekly search process involving approximately 70 to 75 deal sources, including BizBuySell, business brokers, listing websites, and off-market opportunities.Working with virtual assistants and UCLA MBA students to help identify and evaluate potential acquisitions.Reviewing approximately 800 businesses, submitting 20 LOIs, receiving five or six acceptances, and ultimately closing one transaction.How a phone call about a different business led a broker to contact Anthony about Priority Doors and Windows before the company was publicly listed.Why moving quickly, reviewing financials within 24 hours, and having buyer documentation prepared helped Anthony and Alex gain an advantage in the acquisition process.How Anthony and Alex used structured questions and documented processes when communicating with brokers and sellers.What attracted them to Priority Doors and Windows, including its 45-year operating history, strong reputation, experienced sales team, and made-to-order business model.Why the company appealed to buyers without direct experience in the doors and windows industry, including its limited staffing, lack of installation requirements, and customer-funded orders.How Anthony and Alex came to understand that they were primarily acquiring a sales and marketing organization rather than a traditional construction company.The original offer of approximately $4.3 million and how the final purchase price was renegotiated to around $3.5 million.How findings from a Quality of Earnings report and changes in recent business performance affected the acquisition negotiations.The complexities of customer deposits, working capital, and accounting for payments received before orders are fulfilled.Why the acquisition took approximately nine months after the initial LOI, including financing challenges, SBA rule changes, and financial diligence.How a lockbox arrangement helped the buyer and seller establish expectations for cash remaining in the business and compensation for transactions completed during the extended closing period.Anthony's decision to obtain financing proposals from multiple SBA lenders and why the original lender's inability to complete the transaction caused significant delays.How Jared's team helped move the acquisition forward after Anthony and Alex transitioned away from their original financing option.Why Anthony believes certainty of closing, lender experience, and execution should be major considerations when selecting an SBA acquisition lender.The potential consequences of financing falling apart late in a transaction, including losing the business to another buyer.Anthony's experience during the first 30 days after closing, including learning from the seller and understanding the company's daily operations.How Anthony and Alex gradually began implementing changes after spending their first several months learning the business and building trust with employees.Moving from QuickBooks Desktop to QuickBooks Online, changing vendors, and updating operational systems.Why Anthony found that changing employee habits and organizational culture was more difficult than...

  3. Oct 6

    Buying a Business for Freedom: Jaryd Krause on Due Diligence, Deal Risk, and Knowing When to Walk Away

    Jared Johnson sits down with Jaryd Krause, founder of Buying Online Businesses, to talk about how Jaryd went from working as a plumber in Australia to buying three businesses in three years and eventually building a career helping other entrepreneurs acquire companies. Jaryd shares how buying his first businesses allowed him to replace his income, leave plumbing, and build the lifestyle he wanted, while also learning that owning more businesses does not necessarily create more freedom. They walk through Jaryd’s approach to helping buyers evaluate and acquire businesses, from establishing acquisition criteria and financing to finding deals, submitting an LOI, completing due diligence, negotiating terms, and supporting the buyer after closing. Jaryd explains why he looks closely at single-source dependencies, including reliance on one supplier, marketing channel, customer acquisition source, owner, or key employee, and why financial, marketing, and legal diligence can look very different from one transaction to the next. The conversation also gets into the emotional side of acquisitions and why buyers sometimes struggle to walk away after investing months and thousands of dollars into a deal. Jaryd shares an example of a business where declining organic traffic was being offset by substantially higher advertising spend, information that ultimately led his client to walk away rather than inherit what Jaryd described as a potential million-dollar problem. Jared and Jaryd also discuss seller relationships, post-close growth, AI, changing marketing channels, and why listening to customers remains critical as businesses evolve. Main Takeaways: - Buying an existing business can provide an alternative to building a startup from scratch, but acquiring multiple businesses can also work against the lifestyle a buyer originally wanted - Acquisition criteria should be built around the buyer’s available cash, financing capacity, goals, and the type of business they are equipped to own - Single-source dependencies involving suppliers, traffic, revenue, owners, or key employees can create significant risk and should be investigated during diligence - Financial diligence is only one part of the process; marketing, legal, operational, and dependency risks also need to be understood - Buyers should be willing to walk away when diligence reveals risks that materially change the deal, regardless of how much time or money they have already invested - A seller’s willingness to provide access to underlying data can become an important part of diligence - Building a relationship with the seller matters because an acquisition is not purely a financial transaction - The first 30 days after closing can be better spent learning and tracking the business before immediately trying to change or scale it - AI and marketing channels will continue to change, but businesses still need to listen to customers and adapt around what those customers actually want - Buying a business can create more freedom, but only if the buyer stays focused on the lifestyle and goals that motivated the acquisition in the first place Episode Highlights: - Jaryd’s background growing up on Australia’s Gold Coast and working as a plumber before entering business acquisitions - Failing at two online startups and deciding to look at buying established businesses instead - Buying three small businesses between 2014 and 2016 and replacing his plumbing income with the first two acquisitions - Realizing that buying more businesses did not necessarily support his original goal of creating more freedom and time for travel and surfing - Building Buying Online Businesses and helping buyers through education, due diligence support, and buy-side advisory services - How Jaryd establishes acquisition criteria based on a buyer’s available capital and financing capacity - Why he pre-vets opportunities instead of sending buyers a high volume of deals simply to create deal flow - The importance of identifying dependencies on suppliers, marketing channels, owners, and key employees before closing - A furniture business where organic traffic had fallen approximately 50% while advertising spend increased approximately 68%, ultimately leading Jaryd and his client to walk away - Why sunk time and diligence costs should not convince a buyer to proceed with a transaction that no longer makes sense - The importance of managing the buyer-seller relationship and understanding the emotional connection many owners have to the businesses they are selling - Jaryd’s approach after closing, including slowing buyers down during the first 30 days so they can learn the business before focusing heavily on growth - How AI, Google, Meta, TikTok, and other changes in marketing are affecting online businesses and customer acquisition - Jaryd’s motivation to help people avoid major financial mistakes while creating more freedom and experiences outside of work Connect with Jared: If you have questions for Jared, visit: https://jaredwjohnson.com https://www.linkedin.com/in/jaredwjohnson/ Connect with Jaryd Krause: https://buyingonlinebusinesses.com DISCLAIMER: The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. Keywords: buying a business, business acquisition, entrepreneurship through acquisition, ETA, Jaryd Krause, Buying Online Businesses, online business acquisition, due diligence, buy-side advisory, acquisition criteria, business financing, quality of earnings, financial due diligence, marketing due diligence, single source dependency, supplier risk, key person risk, traffic concentration, LOI, business valuation, seller relationship, acquisition risk, sunk cost, post-close transition, online businesses, e-commerce acquisition, recurring revenue, AI, business ownership, lifestyle entrepreneurship, acquisition strategy

  4. Sep 22

    What a Quality of Earnings Report Really Tells You Before Buying a Business

    This episode was recorded a few days before the SBA released its new rules taking effect October 1, including the requirement for a quality of earnings report on business acquisitions with a purchase price of $3 million or more. Because the conversation predates that announcement, it is not an explanation of the new SBA requirement. For a breakdown of the updated rules, listen to the previous episode. In this episode, Jared Johnson sits down with John Hannum, CPA, CFO, and founder of PPS Finance, to explain what a quality of earnings report actually tells a buyer before an acquisition. John explains why a QoE is not an audit, why it should be more than an accounting exercise, and how operational diligence can reveal risks that financial statements alone may miss. He walks through the process his team uses, including direct access to accounting records, proof of cash, transaction modeling, customer and supplier analysis, working capital requirements, and the review of seller add-backs. Jared and John also discuss why buyers should not treat a QoE as a box to check for a lender. John shares why roughly half of the deals his firm reviews do not move forward and why discovering a problem before closing can be one of the best possible outcomes for a buyer. They also share examples of questionable add-backs, poorly prepared reports, hidden operational dependencies, and financial records that may point to larger problems within a business. Main Takeaways: This episode was recorded before the SBA announced its new quality of earnings requirement and does not explain the updated ruleA quality of earnings report should help the buyer understand the business, not simply satisfy a lenderA QoE evaluates normalized financial and operational performance, but it is not the same as an auditDirect access to QuickBooks or another accounting platform can provide a clearer review than relying on PDFsProof of cash helps determine whether reported revenue is supported by actual customer depositsRoughly half of the transactions John’s firm reviews are stopped or materially changed during diligenceFinding a problem before closing may save a buyer from an expensive mistakeTransaction modeling helps determine whether the business can realistically support its proposed debtCustomer concentration, supplier risk, staffing needs, working capital, and owner dependence should all be evaluatedAdd-backs should be supported by actual transactions and reviewed based on whether the expense will continue after closingA large gap between reported earnings and adjusted earnings should be treated as a potential warning signExcessive or questionable add-backs can point to broader concerns about the seller’s business practicesClean books can make a business easier to diligence, more attractive to buyers, and more valuableA low-cost QoE that only restates accounting figures may miss important operational risksBuyers remain responsible for conducting their own diligence, even when working with an SBA lender Episode Highlights: [00:00] Why clean books make a company easier to sell and more valuable [01:05] Important context about when this conversation was recorded [02:20] John Hannum’s background as a CPA, CFO, and acquisition advisor [04:15] What a quality of earnings report is designed to uncover [06:10] Why nearly half of the reviewed deals do not move forward [08:00] Using direct accounting access instead of relying on a crowded data room [11:15] The difference between a QoE and a formal financial audit [15:20] How proof of cash verifies reported revenue [19:00] Modeling the transaction and testing whether the business can support its debt [22:30] Reviewing customers, suppliers, margins, staffing, and working capital [26:00] How seller add-backs are investigated and validated [29:10] Jet skis, personal expenses, and other questionable add-backs [32:20] Why excessive add-backs can signal larger problems within the business [35:45] Preparing clean financial records during the final years before a sale [39:00] Operational risks that may become problems after closing [42:30] Why a quality of earnings report should be more than a spreadsheet [46:15] Choosing an experienced diligence provider instead of checking a box [48:30] The most unusual add-backs Jared and John have encountered [50:00] How to connect with John and PPS Finance Connect with John Hannum: Website: https://ppsfinance.com Connect with Jared: If you have questions for Jared, visit: https://jaredwjohnson.com LinkedIn: https://www.linkedin.com/in/jaredwjohnson/ DISCLAIMER: The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. Keywords: quality of earnings, QoE report, John Hannum, PPS Finance, business acquisition due diligence, proof of cash, financial due diligence, operational due diligence, seller add-backs, adjusted EBITDA, seller discretionary earnings, transaction modeling, working capital, customer concentration, business valuation, acquisition financing, fractional CFO, QuickBooks due diligence, buying a business, business acquisition risks, clean financial records, mergers and acquisitions

  5. Sep 8

    New SBA SOP Changes: What Business Buyers Need to Know Before October 1 with Top SBA 7(a) Lender Jared Johnson

    Jared Johnson breaks down the latest SBA Standard Operating Procedure changes during a live presentation at Acquire Fort Worth. Drawing on nearly two decades of SBA lending experience, Jared explains how acquisition financing has evolved, why the SBA continues to revise its guidelines, and what the newest rules could mean for buyers, sellers, investors, and lenders. Jared begins with the history of SBA business acquisition lending, including the increase in the maximum SBA 7(a) loan amount from $2 million to $5 million, the shift from 25 percent down payments to 10 percent, and the rapid growth in acquisition financing since 2018. He also examines how looser lending policies, rising interest rates, COVID-era stimulus, and delayed loan defaults influenced the current pullback. He then explains the updated equity injection requirements. Buyers must now provide at least 5 percent of the total project cost from an approved source such as cash, qualifying borrowed funds, or a gift or grant. The remaining portion of the required injection may come from limited sources, including seller debt placed on full standby for the life of the SBA loan. Jared also discusses the new restrictions affecting non-controlling minority equity investors. While investor funds may still contribute toward part of the required equity injection, investors generally must own less than 20 percent, exercise no control, and wait until the SBA loan is repaid before receiving distributions related to that investment. Jared explains why these restrictions could reduce outside investment in SBA-financed acquisitions and change how searchers structure their deals. The presentation also covers the new Quality of Earnings requirement for acquisitions with a purchase price of $3 million or more. Jared explains what a useful Quality of Earnings report should evaluate, why lender ordering requirements may create timing challenges, and how a thorough report can uncover unsupported add-backs, cash-flow issues, customer concentration, and working-capital needs before closing. Jared reviews the increase in minimum debt service coverage for initial acquisitions and partner buyouts, as well as the new treatment of transactions that include both a business and commercial real estate. Buyers can use separate loans or a single loan with a blended term, but they can no longer automatically receive a 25-year term simply because real estate represents most of the transaction. He also explains the revised rules for business expansions, including the two-full-fiscal-year operating requirement, the move from six-digit to four-digit NAICS-code matching, and the ability to add new owners when completing a subsequent acquisition. Jared closes by explaining how buyers should approach transactions currently under consideration, why proposed structures should be reviewed before submitting an LOI, and which parts of the new SOP may still require clarification from the SBA. Main Takeaways: The latest SBA SOP takes effect October 1, 2026, for loans receiving an SBA loan number on or after that dateThe new SOP includes a dedicated section addressing business acquisition financingBuyers must provide at least 5 percent of the total project cost from an approved unlimited equity injection sourceApproved sources may include cash, qualifying borrowed funds that can be repaid from outside income, and certain gifts or grantsSeller debt on full standby for the life of the SBA loan may cover up to half of the required equity injectionNon-controlling minority equity investors generally must own less than 20 percent and cannot exercise control over the businessInvestors whose funds count toward the required equity injection may be unable to receive distributions until the SBA loan is repaidInvestor capital contributed beyond the required injection may have greater flexibility, although lender covenants may still restrict distributionsAcquisitions with a purchase price of $3 million or more now require a Quality of Earnings reportThe lender must order the required Quality of Earnings report, creating questions about timing, responsibility, and whether previously ordered reports can be usedQuality of Earnings reports should verify cash flow, add-backs, customer concentration, proof of cash, and other financial informationDue diligence costs, including reasonable Quality of Earnings expenses, may be included in loan proceedsMinimum debt service coverage increased from 1.15 to 1.25 for initial acquisitions and partner buyoutsTransactions involving both a business and commercial real estate must use separate loans or a combined loan with a blended termBuyers can no longer automatically receive a 25-year term when purchasing both a business and its real estateThe appraised value of the real estate, rather than the allocation in the purchase agreement, determines the blended loan termExpansion acquisitions generally require the existing business to have operated for two full fiscal yearsExpansion eligibility now relies on the first four digits of the NAICS code instead of all six digitsNew owners may be added during an expansion as long as the ownership requirements for the existing business are satisfiedLenders may waive the equity injection for qualifying expansion transactions, but the waiver is not automaticSeller notes generally cannot be refinanced until the borrower has completed 36 months of paymentsBuyers considering a transaction now should assume the new rules will apply unless the SBA loan number is obtained before October 1Buyers should review financing structures with an experienced lender before submitting an LOISome provisions, particularly the Quality of Earnings and investor requirements, may receive additional SBA clarification LinkedIn: https://www.linkedin.com/in/jaredwjohnson/ DISCLAIMER: The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. The SBA rules discussed in this episode were newly released at the time of recording and may have since been clarified or revised. Buyers and sellers should consult an experienced SBA lender and their professional advisors regarding their specific transaction. Keywords: SBA SOP changes, SBA SOP 2026, SBA business acquisition loan, SBA 7(a), buying a business, business acquisition financing, October 1 SBA changes, SBA equity injection, SBA down payment, seller standby note, seller financing, equity investors, search fund, entrepreneurship through acquisition, ETA, Quality of Earnings, QoE requirement, business acquisition due diligence, debt service coverage ratio, DSCR, commercial real estate financing, blended loan term, SBA expansion loan, partial change of ownership, business acquisition lender, Acquire Fort Worth, Jared Johnson, small business acquisition, acquisition financing, non-controlling minority equity investment, SBA seller note, SBA loan requirements

  6. Aug 25

    What 5,000 Business Sales Taught Dennis Hayes About Buying and Selling Companies

    Jared Johnson sits down with Dennis Hayes, co-owner of WCI Business Sales, the oldest business brokerage firm in Arizona. Dennis shares what he has learned from a firm with 60 years in business and more than 5,000 closed transactions, what he is seeing in today’s competitive market, and how his perspective changed when he went from representing sellers to buying an 80-year-old business with his son. Dennis explains why good businesses are creating what he calls a “feeding frenzy” among buyers, why owners are holding onto their companies longer, and why strong listings can attract serious interest almost immediately. He also breaks down one of the biggest problems he sees when sellers come to market: sloppy books and records. Jared and Dennis dig into Quality of Earnings reports, seller add-backs, financial due diligence, and why buyers should never assume the numbers they are given tell the whole story. Dennis explains why he believes buyers are ultimately purchasing a known and reliable revenue stream and why understanding where that revenue comes from and whether it will continue after closing should be central to due diligence. Dennis also walks through the acquisition he recently completed with his son. After selling the same Phoenix cooling business eight years earlier, Dennis found himself on the other side of the transaction when the owner was ready to exit. He shares how they evaluated the opportunity, why a Quality of Earnings report became essential to getting the deal done, and what they learned after taking over the 80-year-old company. Jared and Dennis also discuss buying commercial real estate alongside a business, how real estate values can outgrow the cash flow of the operating company, why buyers and sellers need to disclose problems early, and the surprises that can surface late in a transaction. They close with Dennis’s perspective on mentorship, training the next generation of business brokers, and why closing day still motivates him after decades in the industry. Main Takeaways: Quality businesses are attracting significant buyer interest, while good listings are becoming harder to findBusiness owners often sell for personal reasons rather than business reasons, making listing volume difficult to predictSloppy books and records remain one of the biggest deal killers in small business transactionsRunning personal expenses through a business can lower taxable income but ultimately reduce the value a seller can substantiate when it is time to sellQuality of Earnings reports can provide clarity when tax returns and internal financial statements do not accurately reflect the economics of a businessBuyers should independently verify financial information and should not rely on a broker to perform their due diligenceA buyer is ultimately purchasing a known and reliable revenue stream, making the sustainability of that revenue criticalHidden liens, financial issues, and other surprises are likely to surface before closing, so sellers should disclose problems earlyCommercial real estate can be a valuable part of an acquisition, but the business still needs enough cash flow to support both the company and the propertyThe value of commercial real estate can sometimes grow faster than the cash flow of the business occupying it, creating challenges for future buyersDennis’s own acquisition showed how strong financial diligence can turn a complicated opportunity into an attractive dealMentorship and continued learning remain important even after decades of experience and thousands of transactionsBusiness ownership is not for everyone, but for entrepreneurs who enjoy solving problems and building value, the work itself can be rewarding Episode Highlights: [00:00] Why good business listings are creating a feeding frenzy among buyers [00:05] Dennis’s background and the 60-year history of WCI Business Sales [00:13] What Dennis is seeing in the Phoenix business brokerage market [00:29] Why listing volume has become increasingly difficult and owners are holding onto businesses longer [00:51] The number one problem Dennis wishes every seller would address before going to market [00:53] Sloppy books, personal expenses, and the impact they can have on business value [01:03] When a Quality of Earnings report can help establish what a business actually earns [01:23] What buyers should know about financial due diligence [01:35] Why Dennis believes buyers are purchasing a known and reliable revenue stream [01:43] How Dennis went from selling an 80-year-old cooling business to buying it with his son [02:17] Why a Quality of Earnings report was essential to completing Dennis’s acquisition [02:37] The surprises that can surface late in a transaction and why sellers should disclose problems early [02:53] What buyers should consider when commercial real estate is included in an acquisition [03:23] How real estate values can outgrow the cash flow of the operating business [03:43] Why including real estate can change the financing dynamics of an acquisition [03:55] The mentor who taught Dennis the business brokerage industry [04:15] What still motivates Dennis after decades of buying, selling, and advising businesses Connect with Dennis Hayes: Website: https://wcibroker.com/ Connect with Jared: If you have questions for Jared, visit: https://jaredwjohnson.com LinkedIn: https://www.linkedin.com/in/jaredwjohnson/ DISCLAIMER: The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. Keywords: business brokerage, buying a business, selling a business, Dennis Hayes, WCI Business Sales, Arizona business broker, Phoenix business acquisition, quality of earnings, QoE, business valuation, seller discretionary earnings, add-backs, business acquisition due diligence, SBA lending, commercial real estate, business acquisition financing, seller accounting, business buyer, business seller, entrepreneurship through acquisition, ETA, small business acquisition

  7. Aug 12

    Inside Business Brokerage: How Buyers Stand Out, Sellers Choose, and Deals Get Done | Live From Acquire Fort Worth with Layne Kasper

    Jared Johnson sits down with Layne Kasper of Kasper & Associates for a live episode recorded at Acquire Fort Worth. With nearly three decades in business brokerage, Layne shares an inside look at how brokers prepare businesses for sale, identify qualified buyers, protect sellers throughout the process, and navigate an increasingly competitive acquisition market. Layne explains how sellers typically enter the market, why many business owners have little understanding of what their company is actually worth, and how his firm approaches preliminary valuations before taking a business to market. He walks through the process of gathering financial information, preparing detailed acquisition materials, maintaining confidentiality, and using targeted outreach rather than broadly advertising listings. Jared and Layne also discuss what buyers can do to stand out when attractive businesses may receive interest from dozens or even hundreds of potential acquirers. They explain why financial qualification, relevant experience, preparation, and the ability to build trust with a seller can significantly influence who ultimately gets the deal. For buyers, the process is not simply about evaluating the seller. Sellers and their brokers are evaluating buyers at the same time. The conversation also explores current valuation multiples, seller financing, SBA prequalification, private equity versus individual buyers, off-market deal sourcing, and why having the right acquisition team can prevent buyers from wasting time on deals that were never going to close. Layne and Jared also discuss why the long-predicted "silver tsunami" of retiring baby boomer business owners has been slower to materialize than expected. For many owners, selling a company means giving up something deeply connected to their identity, relationships, income, and status. Understanding that emotional component can give thoughtful buyers a major advantage when approaching sellers and negotiating a transaction. Main Takeaways: - Business brokers represent the seller and are responsible for protecting their time, confidentiality, and interests throughout the transaction - Many business owners begin the sale process without knowing what their company is worth or how the acquisition process works - Sellers who begin preparing several years before an exit have more opportunities to position their businesses for a successful sale - A detailed acquisition report or SIM can help buyers evaluate an opportunity efficiently and reduce unnecessary delays - Strong businesses can attract significant buyer interest quickly, making speed and preparation important for serious searchers - Buyers can stand out by demonstrating liquidity, financing readiness, relevant experience, and a clear ability to close - SBA prequalification can help buyers understand the size of acquisition they can realistically pursue before submitting offers - Brokers increasingly want evidence that buyers have the financial resources or investor backing required to complete a transaction - Buyers should remember that the acquisition process is a two-way interview and sellers are evaluating them as potential successors - Building trust with a seller can influence negotiations, deal structure, seller financing, and ultimately who wins the transaction - Buyers who submit generic questions without reviewing available materials can quickly signal to brokers that they may not be serious - Seller financing can help bridge valuation gaps while demonstrating the seller's confidence in the future of the business - Businesses with approximately $500,000 to $1 million in EBITDA may trade around three to four-and-a-half times EBITDA, while businesses above $1 million may begin reaching approximately four-and-a-half to six times depending on the opportunity - Off-market opportunities can often be found through attorneys, bankers, financial advisors, industry groups, and other trusted networks - Searchers may not need to hire a buy-side intermediary if they are already capable of conducting targeted outreach themselves - A strong acquisition team that includes experienced lenders, attorneys, CPAs, and due diligence professionals can help buyers identify both viable opportunities and deals they should walk away from - The anticipated wave of baby boomer business sales has developed more slowly because many owners continue operating well beyond traditional retirement age - A seller's business is often deeply connected to their identity, making respect for what they have built an important part of the buyer-seller relationship - Businesses with established middle management can be particularly attractive because buyers can focus on growing the company rather than immediately replacing the owner's operational responsibilities - Buyers using outside investors and maintaining additional liquidity after closing may be better positioned to handle unexpected challenges and pursue future growth Episode Highlights: [00:00:40] Why buyers need to remember that acquisitions are a two-way interview [00:01:36] Layne Kasper's background, Air Force career, and transition into business brokerage [00:04:20] Kasper & Associates' focus on lower-middle-market businesses in Dallas-Fort Worth [00:06:20] How business owners typically begin thinking about selling their companies [00:08:00] Why attorneys, bankers, and financial advisors can be valuable sources of proprietary deal flow [00:09:40] Preliminary valuations and determining whether a seller is truly ready to go to market [00:11:45] Why seller commitment matters before a broker invests significant time into preparing a listing [00:13:00] Gathering financial information and building a detailed acquisition report or SIM [00:15:30] Preparing a business for market and setting seller expectations around valuation [00:18:30] Targeted buyer outreach and the "rifle" approach to marketing a business [00:20:15] Protecting seller confidentiality and identifying financially qualified buyers [00:22:30] Why attractive businesses can generate dozens or even hundreds of interested buyers [00:24:30] How searchers can stand out in a highly competitive acquisition market [00:26:00] Behaviors that signal to brokers that a buyer may not be serious [00:29:30] Why buyers and brokers sometimes become frustrated with each other [00:32:00] The buyer-seller relationship and why buyers must sell themselves to the seller [00:34:30] What brokers mean when they describe someone as a financially qualified buyer [00:37:00] Jared's approach to buyer prequalification, liquidity, investors, and acquisition financing [00:40:00] Why some brokers require buyers to speak with a lender before moving forward [00:42:00] Sellers choosing individual buyers over private equity and strategic acquirers [00:45:30] Why traditional private equity structures may not fit owners who want a complete exit [00:47:30] Off-market deal sourcing and whether searchers should hire buy-side brokers [00:51:00] Networking strategies for finding proprietary acquisition opportunities [00:54:00] Creative approaches to inventory and accounts receivable in deal structures [00:56:30] Current valuation multiples for businesses at different EBITDA levels [00:59:00] Seller financing and how it can help bridge valuation and financing gaps [01:02:00] Current deal flow and why fewer businesses may be coming to market [01:05:00] Why buyers need experienced lenders, attorneys, CPAs, and advisors on their acquisition team [01:08:00] Why the predicted baby boomer "silver tsunami" has taken longer than expected [01:10:00] The emotional connection between business owners and the companies they have spent decades building [01:13:00] How respecting a seller's legacy can help buyers negotiate better transactions [01:16:00] Interest rates, financing conditions, and their effect on deal flow and valuations [01:19:00] AI exposure in SaaS, digital marketing, consulting, and other acquisition categories [01:23:00] Why buyers are increasingly raising additional equity and maintaining liquidity after closing [01:26:00] The value of acquiring businesses with established middle management Connect with Acquire Fort Worth: Learn more about upcoming Acquire Fort Worth events and connect with the local entrepreneurship through acquisition community: https://www.linkedin.com/company/acquire-fort-worth Connect with Jared: If you have questions for Jared, visit: https://jaredwjohnson.com LinkedIn: https://www.linkedin.com/in/jaredwjohnson/ DISCLAIMER: The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. Keywords: business acquisition, business brokerage, business broker, buying a business, selling a business, SBA loan, SBA financing, buyer prequalification, seller financing, business valuation, EBITDA multiples, lower middle market, entrepreneurship through acquisition, search fund, business searcher, due diligence, deal sourcing, off market businesses, seller psychology, acquisition financing,

  8. Jul 28

    Inside M&A from a Soldier's Perspective: How Guy Bartlett Built a 170 Million Dollar Track Record Buying and Selling SME Businesses

    Jared Johnson sits down with Guy Bartlett, founder of The Business Buyers Club and Fidelis Advisory, a fractional M&A service based in the UK. Guy shares how 42 years in the British Army Reserve shaped his approach to acquisitions, how he stumbled into his first share sale in the late 1990s, and how that experience led him to complete over 150 transactions and personally acquire 13 companies since 2006. Guy explains why M&A is fundamentally a people business, how due diligence can never fully capture a company's culture, and why the "transition trenches" after a deal closes are often harder than the deal itself. He breaks down the psychology of sellers who come to market unprepared, why so few UK business listings actually sell, and how unregulated brokers contribute to unrealistic price expectations on both sides of the table. Jared and Guy walk through what overseas buyers need to know before acquiring a business in the UK, from leadership presence and management incentives to deal structures like security bonds for deferred consideration. They also discuss the coming wave of baby boomer business exits, the risks of waiting too long to sell, and the hard lessons Guy learned from deals that went wrong, including a lost government contract, an underfunded roofing acquisition, and a cultural transition that cost him a business. Main Takeaways: M&A success depends more on people and culture than on spreadsheets or numbersDue diligence can verify contracts and financials but rarely captures a target company's cultureOnly about one in five UK businesses listed for sale actually sellUnregulated brokers in the UK often promise inflated prices to win the mandate feeSellers need a clear, realistic understanding of how much money they actually need before pricing a saleWaiting too long to sell can be catastrophic, including forced closures and lost value for owners and employeesOverseas buyers acquiring UK businesses should be prepared to lead in person, not manage remotelyTax-efficient tools like Enterprise Incentive Schemes and growth shares help retain key management post-acquisitionVendor and seller financing structures reduce reliance on traditional debt and lender riskDeal fever, the emotional rush of finally finding a deal, causes buyers to overlook red flagsMaintaining a strong pipeline of options is the best defense against overpaying or over-committingWhen problems arise late in a deal, asking "how do we mitigate this" is more productive than walking awayThe UK is likely entering its final five years of a major wave of baby boomer business exitsSelf-funded and creative deal structures are becoming more common as debt becomes more expensive and riskyCuriosity, mentorship, and surrounding yourself with people ahead of you accelerates growth as an operator Episode Highlights: [00:00:40] Guy's path from the British Army Reserve into printing, marketing services, and his first share sale [00:02:40] Teaching himself leveraged buyouts and completing his first acquisitions in 2006 [00:04:10] Writing "Business Magic" and founding The Business Buyers Club in 2014 [00:05:30] Launching Fidelis Advisory as a fractional M&A service for busy operators [00:06:50] 42 years of military service and the direct parallels to running acquisitions [00:09:40] Why M&A is fundamentally about people, not numbers [00:11:20] The "transition trenches" and why culture is impossible to fully diligence [00:13:40] Why only about one in five UK business listings actually sell [00:15:00] Unregulated brokers, inflated price promises, and take-home fee incentives [00:16:50] Helping sellers understand the real number they need versus what they want [00:19:30] The dangers of waiting too long to sell, including two cautionary stories [00:23:00] Advice for overseas buyers acquiring UK businesses, from leadership to tax tools [00:27:30] The current state of the UK economy and its impact on SME M&A [00:29:40] Lessons from failed deals, including a lost government contract and an underfunded roofing acquisition [00:33:10] A cultural transition gone wrong after acquiring an electrical contractor [00:36:00] Deal fever, red flags, and the power of walking away [00:38:20] Using a triangle framework to mitigate problems between buyer, seller, and company [00:40:00] The coming wave of baby boomer business exits and where the UK market is headed [00:43:30] Mentorship, curiosity, and Guy's advice on building a strong network [00:45:10] What motivates Guy and where to find him Connect with Guy Bartlett: Website: https://fidelis-advisory.uk Connect with Jared: If you have questions for Jared, visit: https://jaredwjohnson.com LinkedIn: https://www.linkedin.com/in/jaredwjohnson/ DISCLAIMER: The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. Keywords: mergers and acquisitions, SME acquisition, business buyers club, fidelis advisory, UK business sale, leveraged buyout, business broker, due diligence, seller psychology, baby boomer business exit, deal structure, deferred consideration, vendor financing, SBA lending, business acquisition mistakes, culture in M&A, overseas business acquisition, UK economy, exit planning, business valuation

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Learn everything you need to know about buying and selling a business from High-Performing SBA Lender, Jared Johnson, who specializes in business acquisitions. Jared interviews industry experts on both the buying and selling side to provide insights into the buying and selling process. Experts include brokers, attorneys, escrow officers, and seekers. You'll also hear from actual buyers and sellers about their experiences before and after the process. If you're a buyer or a seller or thinking about becoming one at some point in the future, this is the podcast that will provide you with the information you need for a successful transaction.

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