INDEPENDENT BUSINESS ACQUISITION & SBA VALUATION

Business Acquisition Valuation for Buyers, Sellers & SBA Lenders

A negotiated purchase price is not necessarily an independent conclusion of business value. Business Valuation Advisors, Inc. provides CVA®-led valuations for buyers, business owners preparing to sell, and lenders financing privately held company acquisitions.

We evaluate normalized EBITDA and SDE, sustainable cash flow, relevant market evidence, and appropriate valuation methodologies to develop documented conclusions of value.

When needed, separately scoped Quality of Earnings and acquisition financing analysis can help assess earnings reliability, working-capital requirements, and debt-service capacity.

Independent Business Value. Documented Assumptions. Transaction-Focused Analysis.

  • Independent Buy-Side & Sell-Side Business Valuations
  • SBA 7(a) & Lender-Directed Acquisition Valuations
  • Normalized Earnings, Working Capital & Debt-Service Analysis

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Business Valuation Services for Buyers, Sellers & Lenders

Independent Conclusions of Value with Additional Transaction Analysis When Needed

The purpose of a business valuation influences the engagement scope, intended users, and financial questions being addressed. BVA provides independent valuation services tailored to business acquisition buyers, owners preparing to sell, and lenders requiring third-party valuation support.

Each assignment is developed around the relevant valuation standard, available financial evidence, transaction circumstances, and agreed reporting requirements.

01 / FOR ACQUISITION BUYERS

Buy-Side Business Valuation

An independent assessment of business value helps buyers evaluate whether a proposed acquisition price is supported by normalized earnings, sustainable cash flow, and relevant valuation evidence.

KEY ANALYTICAL AREAS

  • Normalized EBITDA, SDE, and cash flow
  • Relevant market and income approaches
  • Enterprise-to-equity value reconciliation
  • Purchase-price comparison and valuation risks

PRIMARY CLIENT QUESTION

What is the business worth independently of the seller's asking price?

 Explore Integrated Buy-Side Acquisition Services → 

02 / FOR BUSINESS OWNERS

Sell-Side Valuation & Exit Planning

Business owners preparing for a sale, retirement, or ownership transition can use an independent valuation to understand economic value drivers and establish supportable expectations before negotiations.

KEY ANALYTICAL AREAS

  • Owner compensation and normalized earnings
  • Business risk and value drivers
  • Comparable transactions and valuation methods
  • Equity value, debt, and working-capital considerations

PRIMARY CLIENT QUESTION

What value is supportable, and which financial factors may influence a future sale?

 Discuss a Sell-Side Valuation → 

03 / FOR ACQUISITION LENDERS

SBA & Lender-Directed Valuations

BVA provides independent business valuation support for SBA 7(a) and other acquisition-financing transactions, subject to the lender's applicable engagement, provider, independence, and reporting requirements.

KEY ANALYTICAL AREAS

  • Independent business-value conclusion
  • Historical and normalized earnings
  • Appropriate valuation approaches
  • Purchase-price and transaction considerations

PRIMARY LENDER QUESTION

What independent business value is supported for the applicable financing engagement?

 Explore SBA & Lender-Directed Services → 

ADDITIONAL TRANSACTION ANALYSIS

Additional Financial Diligence & Financing Analysis When Needed

A business valuation addresses the appropriate conclusion of value. Certain acquisitions also require deeper financial testing or a separate analysis of the proposed transaction's financing and cash requirements.

Quality of Earnings & Financial Due Diligence

Review seller add-backs, revenue quality, cash verification, working capital, and other financial risks that may affect sustainable earnings.

 Explore Quality of Earnings → 

Acquisition Financing & LBO Analysis

Evaluate sources and uses, buyer equity, debt-service coverage, seller financing, operating liquidity, and downside assumptions.

 Explore Acquisition Financing Analysis → 

INDEPENDENT SCOPE & PROFESSIONAL JUDGMENT

 The Right Analysis Depends on the Transaction. 

BVA defines the valuation purpose, intended users, applicable professional standards, analytical procedures, and deliverables before beginning an assignment. Separate Quality of Earnings or acquisition financing work is included only when expressly contracted.

 Discuss Your Valuation Requirements → 

Independent valuation conclusions are not contingent on a desired purchase price or transaction closing. Quality of Earnings is financial due diligence rather than an audit or assurance engagement. Lenders retain responsibility for underwriting, financing approval, and determining whether a report satisfies their engagement requirements.

A $3.45 Million Purchase Price Does Not Automatically Mean a $3.45 Million Business Value

Understanding Negotiated Price, Independent Value & Lender Financeability

A negotiated business purchase price is not necessarily the same as an independently concluded business value. For an SBA acquisition, understanding that distinction is essential before evaluating the proposed financing structure.

Consider the fictional acquisition of Atlantic Facility Services, LLC. The buyer and seller agree on a business purchase price of $3.45 million, while BVA's illustrative independent valuation concludes at $3.40 million. The difference highlights why transaction price, appraised business value, and lender financeability must be evaluated separately.

BVA ILLUSTRATIVE ACQUISITION EXHIBIT

 One Transaction. Three Distinct Financial Measures. 

NEGOTIATED PURCHASE PRICE

$3.45M

Buyer-seller transaction consideration

INDEPENDENT BUSINESS VALUE

$3.40M

Reconciled valuation conclusion

PRICE ABOVE VALUE

$50K

Negotiated price less concluded value

PRICE-TO-VALUE RECONCILIATION

$3,450,000 - $3,400,000 = $50,000

The negotiated price exceeds the illustrative concluded business value by $50,000. This difference is not automatically equivalent to an additional buyer cash requirement or a determination that the transaction cannot be financed. The lender must evaluate the applicable valuation, purchase agreement, transaction structure, and financing requirements.

What Each Financial Measure Actually Tells the Buyer and Lender

01 / TRANSACTION PRICE

What Did the Parties Agree To Pay?

Purchase price reflects the negotiated consideration, subject to the transaction terms and assets included. It may be influenced by strategic motivations, financing arrangements, negotiations, and other buyer- or seller-specific circumstances.

02 / BUSINESS VALUATION

What Is the Business Independently Worth?

An independent valuation evaluates sustainable financial performance, appropriate Income and Market Approaches, company-specific risks, and the economic rights and assets included in the valuation assignment.

03 / LENDER FINANCEABILITY

Can the Transaction Support the Proposed Loan?

Financing also depends on eligible funding uses, available equity, acquisition debt, debt-service capacity, cash requirements, lender policy, and applicable SBA requirements. Business value alone does not establish loan approval.

SUPPORTED EARNINGS BASE

$742,000

Illustrative lender-use EBITDA

The Valuation Is Only One Part of the Acquisition Analysis

BVA's companion Quality of Earnings analysis supports $742,000 in normalized lender-use EBITDA. That figure helps establish the company's earnings foundation but is not interchangeable with cash available for debt payments. Maintenance capital expenditures, cash taxes, working-capital investment, and the proposed financing terms must be evaluated separately.

BVA ANALYTICAL STANDARD

Price, Value, and Financing Must Be Reconciled — Not Assumed Equal

A meaningful price-to-value comparison requires consistent treatment of the business assets, liabilities, working capital, and transaction perimeter. The valuation conclusion should be interpreted within its stated scope and definition of value. BVA documents the underlying assumptions and identifies differences relevant to the transaction; the lender determines whether and how the acquisition may be financed.

Review the supporting example: See BVA's  representative SBA Lender Decision Support Summary  showing how business value, normalized earnings, transaction funding requirements, and lender findings are presented together.

Illustrative case only. Atlantic Facility Services, LLC and all transaction figures are fictional. This exhibit does not constitute a completed appraisal, SBA endorsement, lender approval, or independent assessment of an actual acquisition.

FOR BUSINESS ACQUISITION BUYERS

Business Valuation Is Only One Part of the Acquisition Decision.

An independent business valuation helps determine whether a purchase price is financially supported. However, buyers also need to understand the reliability of reported earnings, ongoing working-capital requirements, and whether acquisition cash flow can support the proposed financing.

BVA's Acquisition Decision Package combines Quality of Earnings, a separately documented independent business valuation, and acquisition financing analysis to help buyers evaluate the transaction before closing.

 Explore Acquisition Decision Packages & Pricing → 

Buyer-commissioned diligence is distinct from lender-directed valuation and Quality of Earnings requirements for SBA or other acquisition financing.

When $742,000 in EBITDA Still Doesn't Support the Proposed Acquisition Loan

How Acquisition Funding, Operating Cash Flow & Loan Structure Affect Debt-Service Coverage

An acquisition may be supported by an independent business valuation and still present material financing challenges. A lender must evaluate more than the company's normalized EBITDA or the negotiated purchase price.

In BVA's fictional Atlantic Facility Services acquisition, the Quality of Earnings analysis supports $742,000 of normalized EBITDA. However, maintenance capital expenditures, cash taxes, working-capital requirements, and acquisition debt service affect the cash available to repay the proposed loan.

NORMALIZED EBITDA

$742,000

Supported earnings base

MODELED DEBT-SERVICE CASH FLOW

$552,000

After specified cash requirements

TOTAL ILLUSTRATIVE FUNDING

$4.05M

Purchase and initial funding needs

BVA FINANCIAL EXHIBIT 01

Illustrative Acquisition Funding Requirements

Negotiated business purchase price $3,450,000
Assumed post-closing working-capital funding $390,000
Minimum operating cash requirement $150,000
Assumed transaction expenses $60,000
Total Illustrative Uses of Funds $4,050,000

Funding assumption: The example treats the working-capital and minimum-cash requirements as amounts requiring separate funding. An actual sources-and-uses analysis must account for assets and cash delivered at closing, the purchase agreement, permitted loan uses, and financing sources to avoid double-counting.

BVA FINANCIAL EXHIBIT 02

From EBITDA to Modeled Debt-Service Cash Flow

Supported normalized EBITDA $742,000
Less annual maintenance CapEx ($70,000)
Less assumed annual cash taxes ($100,000)
Less incremental annual working-capital investment ($20,000)
Modeled Annual Cash Available for Debt Service $552,000

Why This Reconciliation Matters

The company produces $742,000 in normalized EBITDA, but the modeled annual amount available for the specified acquisition debt payments is only $552,000. The $390,000 initial working-capital funding requirement shown above is distinct from the separate $20,000 annual incremental working-capital investment in this cash-flow illustration.

BVA FINANCIAL EXHIBIT 03

How Loan Size Changes Debt-Service Coverage

Both scenarios assume 10.50% annual interest, 10-year monthly amortization, and the same $552,000 in modeled annual cash available for debt service. For illustration, senior acquisition debt and buyer contributions are the only funding sources.

SCENARIO A / HIGHER LEVERAGE

$3.20M

Illustrative acquisition loan

Annual debt service $518,150
Buyer funding $850,000

MODELED DSCR

1.07×

Below the illustrative 1.25× screening target

SCENARIO B / LOWER LEVERAGE

$2.70M

Illustrative acquisition loan

Annual debt service $437,189
Buyer funding $1,350,000

MODELED DSCR

1.26×

Slightly above the illustrative 1.25× screening target

BVA ACQUISITION FINANCING INSIGHT

Lower Borrowing Improves Coverage — But Requires More Buyer Capital

Reducing acquisition debt by $500,000 lowers modeled annual debt payments by approximately $80,961 and increases debt-service coverage from 1.07× to 1.26×. However, the buyer must fund an additional $500,000 in this simplified structure. Better debt coverage does not eliminate the need to evaluate purchase-price support, liquidity, transaction funding, or downside operating risks.

Illustrative assumptions and limitations: All amounts relate to a fictional acquisition. Loan payments assume monthly amortization over 120 months at 10.50%. The $100,000 annual cash-tax provision, $20,000 incremental working-capital investment, financing assumptions, and 1.25× screening target are hypothetical. The modeled DSCR considers only the specified acquisition debt and does not establish SBA eligibility or satisfaction of any particular lender's credit policy. Additional existing debt, seller-note payments, tax effects, cash requirements, or lender adjustments could change the results. Final underwriting, qualified cash-flow calculations, permitted loan uses, equity requirements, and credit approval remain the lender's responsibility.

Review the supporting analysis: Explore BVA's  representative SBA Lender Decision Support Summary  or learn about our  SBA business valuation and lender-directed Quality of Earnings services .

See How BVA Documents Business Value & Earnings Quality

Independent Valuation, Quality of Earnings & Lender Decision Support

An acquisition valuation should demonstrate how the conclusion of value was developed, not simply present a final number. BVA's representative reports illustrate the relationship between independent business value, supported earnings, and transaction financial considerations.

The following fictional reports use coordinated financial assumptions to demonstrate three complementary analyses. Each report is available to review as a PDF.

REPRESENTATIVE REPORT 01

Independent Business Valuation

Review a fictional SBA acquisition valuation documenting normalized earnings, Income and Market Approaches, valuation-method reconciliation, and purchase-price support.

ILLUSTRATIVE CONCLUSION OF VALUE

$3,400,000

Compared with a $3,450,000 negotiated business purchase price.

WHAT THE REPORT DEMONSTRATES

  • Historical and normalized earnings analysis
  • Discounted cash flow valuation
  • Private-company market evidence
  • Independent valuation reconciliation

REPRESENTATIVE REPORT 02

Quality of Earnings Analysis

See how BVA tests seller adjustments against financial evidence and develops a supported earnings indication for acquisition underwriting.

ILLUSTRATIVE LENDER-USE EBITDA

$742,000

Versus $973,000 in seller-adjusted EBITDA — a $231,000 net difference.

WHAT THE REPORT DEMONSTRATES

  • Supported and rejected adjustments
  • Three-period Proof of Cash
  • Revenue quality and customer concentration
  • Working capital, CapEx and diligence findings

REPRESENTATIVE REPORT 03 / INTEGRATED FINANCIAL ANALYSIS

 Acquisition Lender Decision Support Summary 

See how valuation and Quality of Earnings findings can be presented together to clarify the difference between negotiated price, independent business value, normalized earnings, and acquisition funding requirements.

PRICE-TO-VALUE GAP

$50,000

Difference between negotiated price and independent value.

NORMALIZED EBITDA

$742,000

Illustrative lender-use earnings supported by QoE analysis.

POST-CLOSING WORKING CAPITAL

$390,000

Illustrative separate operating funding requirement.

The summary also addresses minimum operating cash, maintenance capital expenditures, Cash Proof findings, and material diligence considerations. It is designed to make the financial evidence easier to review while leaving financing eligibility and the final credit decision to the lender.

All three reports are coordinated, fictional SBA acquisition examples created for educational purposes. They do not describe actual client financial records or completed engagements, and their figures should not be treated as current market valuation benchmarks. An actual valuation or QoE assignment requires separate scope, supporting evidence, and independent professional judgment. Lender acceptance and financing approval are not guaranteed.

Preparing for an SBA Acquisition? Start With the Free Readiness Toolkit

Organize the financial records and diligence items that may matter before valuation, Quality of Earnings, or lender review begins. BVA’s free SBA Valuation & Quality of Earnings Readiness Toolkit includes a 14-page preparation guide and companion Readiness Tracker available in Excel and Google Sheets.
GET THE FREE SBA READINESS TOOLKIT

Professional Credentials Across the BVA Team

CREDENTIALED BUSINESS VALUATION & TRANSACTION ADVISORY EXPERIENCE

Independent Acquisition Valuations Led by a Credentialed Valuation Professional

Business Valuation Advisors, Inc. is led by Joshua Himan, CVA®, BCA®, FMVA®, CMEA®, a valuation and transaction advisory professional with more than 15 years of experience analyzing privately held businesses, acquisitions, and complex financial transactions.

Joshua holds a Master of Science in Applied Economics from Johns Hopkins University and a Master of Science in Finance from The George Washington University. His experience includes business acquisitions, SBA lender-directed valuations, normalized earnings analysis, and acquisition financial due diligence.

Valuation Analysis Beyond Reported EBITDA

An independent acquisition valuation requires more than applying a multiple to reported earnings.

BVA evaluates sustainable EBITDA and Seller's Discretionary Earnings (SDE), owner compensation, financial performance, market evidence, risk, and appropriate valuation methodologies to develop a supportable conclusion of business value.

When relevant to the engagement, our analysis also addresses enterprise-to-equity adjustments, working-capital requirements, capital expenditures, and debt-service capacity to help clients understand the financial economics of a proposed transaction.

Independence, Professional Standards & Lender Confidence

BVA approaches each valuation assignment with an emphasis on objectivity, documented financial evidence, and professional judgment.

Our valuation reports identify the applicable standard and premise of value, valuation date, methodologies, material assumptions, and supporting financial analysis. Engagements are performed under the professional standards applicable to their scope, including NACVA Professional Standards when applicable.

For lender-directed transactions, BVA coordinates valuation scope and reporting requirements with the lender while maintaining an independent valuation conclusion. Financing eligibility and credit approval remain the lender's responsibility.

CVA® | BCA® | FMVA® | CMEA®

15+ Years of Experience | M.S. Applied Economics | M.S. Finance

Joshua Himan's Credentials & Experience Client Reviews & Selected Engagements

Frequently Asked Questions About Acquisitions, Sales & SBA Valuation
BVA provides independent business valuation and transaction analysis for privately held company acquisitions, potential business sales, SBA-financed transactions, lender-directed valuations, succession transactions, and other ownership changes. Depending on the engagement, the analysis may also address normalized earnings, working capital, capital expenditures, debt-service capacity, Quality of Earnings, Proof of Cash, and other financial issues relevant to the proposed transaction.
Enterprise value generally reflects the value of the operating business before considering how it is financed. Equity value reflects the value attributable to the owners after considering relevant cash, interest-bearing debt, and other non-operating assets or liabilities. BVA reconciles these amounts so buyers, sellers, and lenders can understand how the operating-business value translates into the equity value involved in the transaction.
An SBA-related business valuation may be obtained or directed by the lender to satisfy applicable financing requirements and support the reasonableness of the transaction value. The valuation is prepared as an independent professional analysis rather than as an advocacy model for the buyer or seller. BVA evaluates the subject business, normalized financial performance, relevant valuation approaches, balance-sheet considerations, and transaction terms within the scope required for the assignment.
Proof of Cash compares recorded revenue and cash activity with bank deposits and other available financial records to help evaluate whether reported operating results are supported by actual cash collections. Depending on the scope and available documentation, BVA may use Proof of Cash procedures to identify timing differences, unusual deposits, potential revenue-quality issues, or inconsistencies that warrant further diligence. It is a financial-analysis procedure and is not presented as an audit or forensic examination unless separately engaged for that scope.
A Quality of Earnings (QoE) analysis evaluates the sustainability and reliability of reported earnings rather than simply accepting historical EBITDA, SDE, or net income at face value. Depending on the scope, BVA may analyze revenue trends, customer concentration, recurring versus nonrecurring items, proposed add-backs, cash conversion, working capital, and other financial issues that may affect valuation or financing. QoE can be particularly useful when the buyer, lender, or transaction size warrants a deeper level of financial due diligence.
Yes. BVA can provide an independent valuation and transaction analysis before a business is marketed or negotiated for sale. The work may include normalized earnings, enterprise and equity value, market evidence, working-capital considerations, debt and cash treatment, and identification of financial issues that could affect buyer diligence or transaction expectations. This can help an owner enter the sale process with a more supportable understanding of value and the financial factors likely to matter in negotiations.
Yes. Seller notes, earnouts, rollover equity, buyer equity contributions, contingent payments, and other transaction terms can materially affect the economics of an acquisition or sale. BVA can analyze how these terms interact with cash flow, debt-service capacity, working capital, and value so the parties can better understand the financial consequences of the proposed structure.
Timing depends on the complexity of the business, the completeness of the financial records, the number of entities involved, and whether the engagement includes additional transaction analysis such as Quality of Earnings, Proof of Cash, working capital, or financing support. Once the scope and available information are reviewed, BVA can provide a realistic timeline for the specific assignment.
BVA evaluates the proposed purchase price in the context of normalized earnings, cash flow, market evidence, balance-sheet items, working capital, capital expenditures, debt-service capacity, and the transaction structure. The objective is not simply to determine a theoretical value, but to assess whether the price is financially supportable based on the economics of the business and the terms of the proposed transaction.
The information required depends on the transaction, but engagements commonly begin with historical financial statements, tax returns, current interim results, general-ledger detail, balance sheets, debt schedules, ownership information, and the proposed purchase or financing terms. When appropriate, BVA may also request bank statements, customer or revenue detail, working-capital information, capital-expenditure history, and documentation supporting proposed earnings adjustments. A focused information request is provided once the scope is established.
BVA reviews historical financial performance to identify adjustments that may be necessary to estimate sustainable earnings. Depending on the business, this may include owner compensation, personal or discretionary expenses, nonrecurring items, related-party transactions, unusual income or expenses, and other proposed add-backs. Material adjustments are evaluated based on the available support rather than automatically accepted, and the resulting normalized earnings are used in the valuation and transaction analysis as appropriate.
BVA analyzes the operating working capital required to support the business and compares it with the level expected to be delivered at closing. Depending on the transaction, this may include accounts receivable, inventory, accounts payable, accrued operating liabilities, customer deposits, and other operating current accounts. The analysis can help establish a normalized working-capital requirement or peg and identify whether additional buyer funding may be needed after closing.
BVA evaluates whether the business’s normalized cash flow can reasonably support the proposed financing structure. The analysis may consider principal and interest payments, debt-service coverage, working-capital needs, replacement capital expenditures, seller financing, buyer equity, and other recurring cash requirements. The objective is to connect the valuation with the financing reality of the transaction rather than evaluating purchase price in isolation.
Yes. BVA can prepare independent business valuations for lenders and financing participants when a transaction requires a qualified third-party valuation. The engagement scope is coordinated around the lender’s requirements and may include analysis of normalized financial performance, purchase-price reasonableness, valuation approaches, balance-sheet items, transaction structure, and other factors relevant to the financing decision.
BVA considers whether historical capital expenditures are sufficient to maintain the business’s operating capacity and whether future replacement or growth-related investment may be required. Depending on the business, the analysis may compare reported depreciation, historical capital spending, equipment age, maintenance requirements, and expected reinvestment needs. This helps avoid overstating sustainable cash flow when the business requires ongoing capital investment to support operations.
The first step is a confidential consultation to discuss the business, transaction structure, purpose of the valuation, financing considerations, timing, intended users, and information currently available. BVA can then determine the appropriate scope, identify any valuation or transaction issues that warrant additional analysis, and provide an engagement letter and focused document request.
Explore All Private Business Valuation Services
 

Explore BVA's independent business valuation, acquisition advisory, SBA financing, Quality of Earnings, ownership valuation, and specialized financial analysis services.

Buy-Side Due Diligence & Acquisition Decision Package
 

Integrated Quality of Earnings, independent business valuation, and acquisition financing analysis. Explore BVA's buyer-focused packages, starting prices, and representative acquisition case study.

SBA 7(a) Valuation & Quality of Earnings
 

Independent lender-directed business valuations and Quality of Earnings services for qualifying SBA acquisitions, including normalized EBITDA, Cash Proof, working capital, and transaction risks.

Quality of Earnings & Financial Due Diligence
 

Evaluate the reliability of reported earnings through EBITDA and SDE normalization, seller add-back testing, Proof of Cash, revenue quality, working capital, capital expenditures, and financial-risk assessment.

Leveraged Buyout (LBO) & Acquisition Financing
 

Evaluate acquisition sources and uses, debt capacity, DSCR, working capital, seller financing, buyer equity, cash-flow sensitivities, and potential investment returns.

Business Valuation Multiples by Industry
 

Understand SDE, EBITDA, and revenue multiples, private-company transaction benchmarks, industry differences, normalized earnings, and factors that influence supportable business value.

SDE vs. EBITDA Business Valuation Guide
 

Learn how Seller's Discretionary Earnings, EBITDA, owner compensation, replacement-management costs, and earnings adjustments affect acquisition valuation and purchase-price analysis.

Joshua Himan's Credentials & Experience
 

Review Joshua Himan's professional valuation credentials, graduate education, transaction experience, and background in private-company valuations, acquisition financial analysis, and Quality of Earnings.

Client Reviews & Selected Engagements
 

Read client feedback and explore representative business valuation, Quality of Earnings, acquisition due diligence, and transaction advisory engagements completed by BVA.

Discuss Your Acquisition, Sale or SBA Valuation

Whether you are evaluating a business acquisition, preparing for a sale, or financing a transaction through SBA or other acquisition debt, BVA can help determine the appropriate valuation and financial-analysis scope for the transaction.

Schedule a Confidential Consultation