Know what you own.
Choose what happens next.

SDE

Seller’s discretionary earnings often applies to owner operated businesses. SDE starts with profit and adjusts for one owner’s compensation and supported discretionary expenses.

EBITDA

Earnings before interest, taxes, depreciation, and amortization often applies when professional management and larger earnings support an institutional review.

NOI

Net operating income measures income producing property before debt service and capital expenditures. Keep business earnings and property NOI separate before combining the ownership strategy.

Review owner dependence, weak bookkeeping, customer concentration, short contracts, declining margins, undocumented add backs, deferred maintenance, licensing exposure, employee turnover, lease risk, pending claims, and inconsistent cash reporting.

Rank each issue by financial impact, repair cost, responsible person, and completion date.

Document recurring work. Assign customer relationships. Establish management authority. Record passwords and systems. Build weekly reporting. Cross train essential roles. Confirm licenses and contracts survive a change in control.

Track periods when operations perform without daily owner intervention.

Select three value drivers. Examples include margin repair, recurring revenue, pricing, collections, customer retention, management coverage, occupancy, rent collection, expense control, or deferred maintenance.

Set a baseline, owner, weekly measure, target date, and evidence file for each driver.

For each path, compare control after closing, cash at closing, future income, personal guarantees, tax review, management responsibility, transition period, retained equity, and risk if performance changes.

Choose priorities before negotiating price. Structure often changes the owner’s outcome more than headline value.

Define decision authority, compensation, ownership timing, purchase funding, voting rights, dispute rules, performance expectations, lender approval, estate coordination, and a backup leader.

Separate family relationships from job roles and ownership rights in written agreements prepared by qualified professionals.

Compare industry experience, operating role, capital commitment, decision rights, salary, distributions, reporting, buyout terms, nonperformance remedies, future capital needs, and timing for complete ownership transfer.

Confirm both parties understand who runs the business on day one and who owns each major decision.

Create separate folders for financials, tax records, legal documents, ownership, employees, customers, vendors, contracts, licenses, insurance, intellectual property, equipment, property, environmental records, financing, claims, and transition planning.

Use staged access. Share identity and sensitive records only after approval and confidentiality protections.

Review estimated proceeds, debt payoff, transaction expenses, payment timing, seller note risk, retained equity, income needs, estate plan, charitable goals, insurance, asset protection, and professional responsibilities.

Bring qualified tax, legal, estate, insurance, and financial professionals into the process before final terms.