Marinas Sell At 6.6x. Car Washes At 4.7x. Here Is Why I Walk Away From Every One Of Them.

The best businesses on the market are often the worst deals.

That sentence sounds backwards until you do the math. Fresh transaction data across more than 9,500 closed sales puts the overall small business average at roughly 2.5x SDE. But the headline-grabbing sectors sit far above that. Marinas are closing at 6.6x. Car washes at 4.7x. Storage facilities at 4.6x. Funeral homes and medical billing at 4.4x. Laundromats at 4.1x. These are real businesses with recurring revenue, high barriers to entry, and owners who can step back. They are also, at those prices, almost impossible to make work on leverage. The quality is real. The price is the problem.

Why High Multiples Cluster

Multiples climb where the work goes away. That is exactly what makes them expensive.

Look at what the top of the list shares. Recurring revenue you do not have to chase. Physical assets or licenses that keep new competitors out. Operations that run without the owner standing on the floor 60 hours a week. A storage facility collects rent whether you show up or not. A car wash with the right equipment is closer to a vending machine than a job. The market knows this, so the market pays for it. Buyers compete, multiples rise, and the very features that make the business attractive are the features baked into a 4x-plus price. You are not overpaying because you got fooled. You are overpaying because everyone else sees the same thing you do.

Where The Math Breaks

At a 4.5x multiple on an 80/10/10 structure, the debt service eats the business alive.

Run it. Take a business with $300,000 in SDE. At the Bulletproof ceiling of 3.0x, that is a $900,000 purchase. At a storage-facility 4.6x, the same earnings cost you nearly $1.38 million. The earnings did not change. The debt did. On an SBA 7(a) at current pricing over 10 years, that extra $480,000 of loan adds well over $6,000 a month in payments, and it comes straight out of the cash flow that was supposed to be yours. Your annual cash flow after all debt collapses. Your payback period stretches from under a year toward several. Your stress-tested DSCR, the number that tells you whether the deal survives a 20% revenue dip, falls below the line where I am willing to put a buyer's money. The business is fine. The deal is broken, and the only thing that broke it was the multiple.

A premium business at a premium price is not a premium deal. It is a slower way to lose.

I watched a buyer last year fall in love with a car wash that checked every box: passive, recurring, clean books. The asking multiple was 4.8x. He could not understand why I kept pointing at the same line. It was not the wash. It was that after the bank got paid, there was almost nothing left for him, and one slow quarter would have put the loan underwater. He walked. Six months later he bought a less glamorous service business at 2.6x that pays him real money every month. That is the trade nobody romanticizes.

The Move

Let the multiple gate the deal before you fall for the business.

The discipline here is simple and it is unsexy: know the ceiling before you walk in the door. After 35 years of looking at these, the buyers who get hurt are almost never the ones who bought a bad business. They are the ones who bought a good business at a price the cash flow could not carry. Run the asking price against the SDE before you let yourself get attached. If it clears 3.0x and the other four criteria hold, keep going. If it does not, the answer is not always no, but it does mean the price has to come down or the structure has to change, because the math at the sticker is a hard pass. You can check any listing against the full Bulletproof framework at DealScore Pro in about a minute, before the broker has you emotionally invested.

What This Means For You

If you are hunting in a premium sector right now, decide your walk-away multiple before the first call, not after the second showing. The most profitable-looking business on the page is the one most likely to talk you out of your own math.

Knowing which deals to walk from is half the method. The free masterclass breaks down all five Bulletproof criteria and the exact math I run before I ever fall for a business.

Want to see how I stress-test every deal against cost shocks, revenue dips, and hidden liabilities before I'd put a dollar at risk? I walk through the entire Bulletproof method in a free 28-minute masterclass.

Forward this email. Tell them to grab Mike's free book - Real Estate Is for Suckers: Buy a Business Instead. Same framework Mike uses to stress-test every deal.