I spent about an hour on the phone last night with two clients who asked me a question I hear all the time: https://youtu.be/PSB_lBnnNJs
“Dave… are all these business sellers insane? What is going on out there?”
They were frustrated, confused, and starting to wonder if they were the problem.
They weren’t.
What Triggered the Frustration
These clients were reviewing a business listing prepared by a business broker. They sent me the profile and wanted help deciding whether it was worth pursuing.
Within minutes, several red flags jumped off the page.
Red Flag #1: No Balance Sheets
The business profile included income statements — but no balance sheets.
That’s a serious problem.
Without balance sheets, you have no idea:
How much inventory the business requires
How much operating capital is needed
What assets and liabilities transfer with the sale
It’s like evaluating a person’s finances using only their bank statement, without knowing whether they own a house, have debt, or are drowning in credit cards.
You simply can’t make a reasonable decision with half the picture.
Red Flag #2: SDE and EBITDA Listed as the Same Number
This one is impossible.
The broker listed:
SDE (Seller’s Discretionary Earnings)
EBITDA
…as the same number.
That tells me immediately that the broker who prepared the profile does not understand the difference between the two.
And if someone doesn’t understand that distinction, they should not be preparing business valuations or marketing materials.
If you don’t know the difference yourself, that’s exactly why education has to come first when buying a business.
Red Flag #3: Lazy and Inflated Add-Backs
The broker had simply:
Removed the owner’s wages entirely (instead of normalizing them)
Removed travel, meals, entertainment, and vehicle expenses
The implication was that all of these expenses were purely personal.
But the business sold materials to hotels and cruise lines.
Ask yourself:
How do salespeople meet customers?
How do they attend trade shows?
How do they travel without expenses?
These costs don’t disappear just because ownership changes.
This wasn’t normalization — it was cash flow inflation designed to justify a higher asking price.
Red Flag #4: “Inventory Included”… With No Amount Stated
The listing claimed that inventory was included in the sale.
But:
No inventory value was disclosed
No balance sheet showed normal inventory levels
So what’s included?
$10,000 of inventory?
$200,000?
No one knows.
And yet the broker was asking these buyers to make an offer.
The Big Question My Clients Asked
They finally said:
“Dave, how can a broker present something like this?
Don’t business brokers need a basic understanding of accounting?”
And here’s the uncomfortable truth:
No — they don’t.
Why This Happens So Often
In many markets, business brokerage is a contingency-only industry.
That means:
Brokers often work for free until a deal closes
Offices need people to sign listings and produce profiles
Many brokers are poorly trained and poorly supervised
A lot of them are attracted by the idea of big commission checks — not by mastery of valuation, accounting, or deal structure.
They haven’t invested the year or two it takes to go through proper training programs. And it shows.
The result?
Incomplete business profiles
Inflated asking prices
Frustrated buyers
Un-sellable businesses
Why Buyers Feel Like the World Is Crazy
These buyers weren’t inexperienced or broke.
They had:
Saved real money
Educated themselves
A genuine desire to buy a good business
But every time they analyzed a listing, they reached the same conclusion:
The business was wildly overpriced.
That’s not a coincidence.
Many sellers want two to three times what their business is actually worth, and brokers often fail to set realistic expectations — sometimes because they simply don’t know any better.
The Real Solution: Get Ahead of the Brokers
Here’s a statistic many people don’t realize:
Only about 1 in 5 businesses that sell ever go through a broker.
That means:
80% of businesses change hands privately
The best opportunities are found before a broker gets involved
That’s why I always tell buyers:
You have to get out ahead of the brokers.
That’s exactly what the next phase of my self-serve coaching program is designed to help with.
Good businesses do exist.
You just won’t usually find them in sloppy, inflated broker listings.
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