Issue 004 — SBA-range SMB Market, Week of May 4

Preheader: 23 listings reviewed, 22 in valid US sample. Median 3.82x. Construction at 54% of sample, the highest single-category concentration in four weeks. RE-inclusive separate reporting introduced as promised.

Twenty-three listings in the $1M–$5M cash flow range were reviewed from BizBuySell for the week of April 28–May 4, 2026. Zero were excluded as repeats from prior issues. Zero withheld asking price, a return to the Issue 001-002 baseline after Issue 003's 17% non-disclosure rate. One listing was based in Ontario, Canada and is reported separately given that SBA financing does not extend to non-US operations. The remaining 22 US listings produced a sample median of 3.82x, with a range from 0.88x to 8.47x.

The week-over-week directional move was downward, with the median compressing from Issue 003's 4.25x to 3.82x. As repeated in prior issues, single-week movements at this stage reflect sample composition rather than directional market signal. The 90-day rolling median targeted for Issue 010 onwards remains the appropriate metric for trend identification. With four weekly samples now accumulated, the rolling four-week sample median is 4.10x.

Two findings warrant attention this week. First, twelve of the 22 US listings (54%) fell into the Construction category, the highest single-category concentration in any of the four weekly samples to date. This is not a permanent feature of the market but it does enable the first credible sub-segment analysis within Construction, included below. Second, real-estate-inclusive listings continued their multi-week climb in sample share, reaching 27% of the US sample (six of 22 listings) after the 13%, 13%, 25% sequence in Issues 001-003. The separate reporting column for RE-inclusive deals, flagged for Issue 004 introduction in the prior issue, is implemented below.

The asking-price disclosure rate returned to 100% this week (zero of 23 listings withheld asking price), suggesting that Issue 003's 17% non-disclosure rate was sample noise rather than a behavioral shift. This pattern will continue to be tracked.

Construction's median of 3.59x sits below the sample median of 3.82x. The sub-segment analysis below explains why.

Home services produced the highest category median at 7.12x, with both listings (Property Maintenance Texas and Plumbing/HVAC Ohio) including real estate. The operating multiples net of property allocation cannot be cleanly isolated because neither listing discloses the property valuation separately. The 7.12x median should not be interpreted as the operating multiple for the category.

B2B Services produced a tight 5.00x median across three diverse listings (marketing consultancy, entertainment production, industrial parts distribution), suggesting category consistency at this size range despite the disparate underlying business types. As sample accumulates, B2B Services may benefit from sub-segmentation similar to what is implemented in Construction below.

As flagged in Issue 003, real-estate-inclusive listings now warrant separate tracking given the persistent share of weekly samples. Six of the 22 US listings included real estate this week.

The RE-inclusive median this week was 4.22x, modestly above the no-RE median of 3.82x. With only one listing in the six (Property Maintenance Irving) disclosing the property allocation explicitly, blended multiples cannot be cleanly converted to operating multiples. This is a structural disclosure gap in the SBA-range market: brokers regularly bundle business value and real estate value into a single asking price without separation.

A buyer's first request on any RE-inclusive listing should be the property appraisal and the implied operating multiple. Without that data, comparison to category norms is not meaningful.

The four-week trajectory of RE-inclusive sample share (13%, 13%, 25%, 27%) is now persistent enough to suggest a structural shift rather than sample noise. Possible explanations include selection bias in which sellers approach the SBA-range market (operators with property may be more likely to sell during periods of elevated commercial real estate prices), broker behavior favoring blended listings to obscure operating multiples that would be unflattering on their own, or simply more retiring owner-operators who built their businesses around owned facilities. With four weeks of data, the pattern is real. The cause requires longer observation.

This week's twelve Construction listings enable the first credible sub-segment analysis within the category, though most sub-segments contain only n=1 and should be read accordingly.

Three observations.

First, the sub-segment dispersion (2.17x to 4.75x median) is wider than the category dispersion would suggest from a single number. Construction is not a single market with a single multiple; it is at least nine distinct sub-markets with materially different competitive dynamics, customer concentration profiles, and earnings durability. Lumping them under a single category median understates the variance a buyer needs to underwrite.

Second, the lowest-multiple sub-segments (Pipeline/Midstream at 2.17x, Outbuildings at 2.39x) share a structural feature: each is highly tied to specific end markets with their own boom-bust cycles independent of broader construction demand. The pipeline business is exposed to energy capital expenditure cycles, the outbuildings business to agricultural and rural residential markets. Lower multiples reflect higher cyclical risk, not lower operating quality.

Third, the highest-multiple sub-segments (Commercial at 4.75x, Excavation at 4.47x) involve diversified end markets and longer-cycle visibility (active backlog, multi-year contracts). The Cleveland commercial construction listing this week disclosed $40M of work in progress and $250M+ in pipeline; the Indianapolis excavation listing disclosed school and municipal customer concentration. Both have revenue visibility that pure project-shop construction businesses do not.

A single week's data is not sufficient for category conclusions. As samples accumulate, Construction sub-segments will be tracked to determine which patterns are structural and which were composition.

Ranked by asking multiple, ascending. Sample median 3.82x. Top five discussed.

Asking $1.555M on $1.775M SDE. Implied multiple 0.88x, 77% below the sample median. The lowest multiple in the four-week sample to date.

A multiple below 1.0x means the asking price is less than annual cash flow. This is not a typical SBA-range listing pattern; the explanation is almost certainly broker pricing error, distressed seller circumstance, or a structural feature of the listing not disclosed in the cover sheet. The listing is for a plaintiff personal injury practice with case-based revenue (contingency fees, two-to-three year case lifecycles) and 80% concentration in a specialty area.

The most plausible explanation is that the trailing twelve-month SDE figure includes one or more large contingency fee settlements that are not repeatable. Personal injury practices generate revenue irregularly as cases close, and a single multi-million-dollar settlement can inflate trailing earnings by a year's worth. A buyer's first diligence question should be the case-by-case revenue distribution for the past five years, with single-case revenue contributions identified. If the trailing SDE includes a large nonrecurring settlement, the normalized SDE is substantially lower, and the implied multiple is materially higher than 0.88x.

Asking $990K on $1.014M SDE. Implied multiple 0.98x, 74% below the sample median. The second sub-1x listing in the same sample.

The Wood Casework listing includes real estate (owned), which provides at least a partial explanation: the operating multiple net of property cannot be calculated because the broker did not disclose the property valuation. If the property is valued at $400-600K, the operating multiple is approximately 0.4-0.6x SDE, which is implausibly low and suggests either the SDE figure is overstated or the seller is highly motivated for non-financial reasons. The brief listing description ("Owner is open to continuing on as a minority owner") suggests a seller seeking partnership rather than full exit, which often correlates with material business issues the seller does not want to manage alone post-sale.

A buyer should request three-year P&L with significant add-backs identified, customer concentration analysis, equipment list with replacement values, and the property appraisal that should accompany any RE-inclusive listing.

Asking $2.2M on $1.012M SDE. Implied multiple 2.17x, 43% below the sample median. The lowest Construction sub-segment median in the sample.

A pipeline construction and maintenance business with twenty years of operating history, debt-free balance sheet, and disclosed Master Service Agreements (MSAs) with energy customers. Real estate is available separately (twenty acres on a major highway, recently constructed shop). The 38.6% SDE margin is elevated for construction generally but plausible for specialized midstream work where regulatory expertise and MSA relationships justify pricing power.

Diligence priority: customer concentration and capex cycle position. Pipeline construction demand is tied to upstream energy capex cycles, which have been compressed in recent years and remain uncertain through 2027. The "increasing backlog for the remainder of 2026" disclosure is positive but the buyer should request the multi-year MSA contract terms, customer-level revenue breakdown, and 2026 backlog conversion rates by customer. The 2.17x multiple reflects market skepticism about whether the current backlog and MSA structure persists through the next energy capex cycle.

Asking $2.3M on $1.05M SDE with real estate included. Implied blended multiple 2.19x, 43% below the sample median. The lowest-multiple Healthcare listing in the sample.

A North Scottsdale implant-focused dental practice with $2.8M revenue, fee-for-service model, and high-income demographic positioning. The 37.5% SDE margin is at the upper end of normal for dental practices but consistent with implant specialty practices that operate at premium price points.

The 2.19x blended multiple is unusually low for a profitable specialty dental practice with included real estate. Without the property valuation disclosure, the operating multiple cannot be cleanly calculated, but a North Scottsdale commercial property suitable for a dental practice typically values between $800K-$1.5M depending on size and configuration. If the property is $1M, the implied operating multiple is approximately 1.2x SDE, which is implausibly cheap and suggests the seller has identified specific issues (associate departure planned, key referral relationship at risk, lease or operational issue not yet disclosed). A buyer should request the property appraisal first, then evaluate the operating multiple separately.

Asking $3.1M on $1.299M SDE. Implied multiple 2.39x, 37% below the sample median.

A twenty-year-old turnkey construction operation specializing in agricultural and rural residential outbuildings (custom barns, farm shops, garages, RV storage). The 30.4% SDE margin is elevated for construction but consistent with niche operators who own market position in geographically defensible regions.

Diligence priority: end-market exposure and competitive moat. Outbuilding construction demand is tied to agricultural cycles, rural property values, and residential renovation patterns. The 2.39x multiple suggests market skepticism about either current backlog durability or competitive defensibility. A buyer should request three-year backlog evolution, customer acquisition channels (the listing references "loyal local crew, strong supplier relationships, repeat and referral business" without disclosing customer count or geographic concentration), and competitive analysis of similar regional operators.

Number 1 Gross Med Spa, Gilbert, AZ. Asking $25.0M on $3.0M EBITDA. Implied multiple 8.33x, 118% above sample median. The highest non-RE multiple in the sample by a wide margin.

The listing combines a $25M asking price with marketing language ("Number 1 Gross Med Spa in Nation," "Award Winning") and a 60% reported EBITDA margin on $5M revenue. A 60% EBITDA margin on a physical service business with seven medical-grade devices, two RN injectors, and six laser technicians is implausible without normalization. Med spa operations typically run 20-35% EBITDA margins after accounting for medical director fees, equipment depreciation, lease costs, and labor. The 60% figure suggests either devices are not being depreciated through P&L (already paid off, but should still depreciate for accounting purposes), founder compensation is not yet replaced, or aggressive add-back treatment is producing the headline EBITDA.

The "9x EBITDA buyout" framing in the listing title is the seller's anchor. The market multiple for a med spa at this revenue scale, normalized for replaceable founder labor and proper depreciation, is more likely 4-6x normalized EBITDA. The asking price reflects the seller's preferred narrative rather than what the market is likely to pay.

Plumbing & HVAC, Ohio. Asking $18.5M on $2.185M EBITDA, real estate included. Implied blended multiple 8.47x, 122% above sample median. The highest blended multiple in the sample.

A 30-year operating plumbing and HVAC business with ~75% repeat customer base, recently developed headquarters with warehouse and training facilities, and 50 full-time employees. Revenue of $11.88M produces 18.4% EBITDA margin, which is normal for the category. The 8.47x blended multiple includes both the operating business and the recently-developed real estate, neither of which is disclosed separately.

The listing's reference to "recently upgraded operations facility" suggests substantial recent capital investment that may justify a portion of the elevated multiple. Without property valuation disclosure, the operating multiple cannot be calculated. If the property is valued at $4-5M (consistent with a recently developed commercial facility supporting 50 employees), the operating multiple is approximately 6.2-6.6x EBITDA, which is at the upper boundary of category norm but not implausible for a 30-year operating business with strong recurring revenue.

Electrical Contracting, Englewood, CO. Asking $9.0M on disclosed 2026 projected SDE of $2.4M, with TTM 2025 SDE of $1.4M. Real estate included. Implied multiple varies materially based on which SDE figure is capitalized.

This listing illustrates a pattern worth flagging. The broker-stated multiple of 3.75x uses the 2026 projected SDE ($2.4M). The trailing-twelve-month 2025 SDE was $1.4M, which would imply a multiple of 6.43x against the same asking price. The four-year SDE history (2022: $1.4M, 2023: $1.8M, 2024: $1.95M, 2025: $1.4M) shows a peak in 2024 and decline in 2025, with the 2026 projection of $2.4M representing a recovery beyond any prior year's actual.

A buyer underwriting against the 2026 projection is buying a multiple of 3.75x. A buyer underwriting against the trailing actual is buying 6.43x. An SBA lender will underwrite somewhere between these figures, likely closer to the trailing actual. The broker-stated multiple is not the price; it is the seller's preferred normalization.

The asking-price disclosure rate normalized to 100% this week, supporting the interpretation that Issue 003's 17% non-disclosure rate was noise rather than signal. This metric will continue to be tracked across future issues.

The RE-inclusive listing share continued upward (13%, 13%, 25%, 27% across Issues 001-004) and is now persistent enough to warrant treatment as a structural feature rather than sample composition. RE-inclusive separate reporting will continue. The disclosure quality on RE-inclusive listings remains a sample-wide weakness: only one of six listings this week disclosed property valuation explicitly. This methodology gap will be flagged in future weeks until broker disclosure practice improves or the publication develops a methodology for estimating property allocation absent disclosure.

Construction's 54% sample share this week is the highest single-category concentration in the four-week history. Whether this represents seasonal pattern (spring construction listing surge), market-wide seller behavior, or sample randomness will become clearer with more weeks of data. The Construction sub-segment table will continue weekly; meaningful sub-segment medians require n=3+ accumulation.

The two sub-1x multiple listings this week (Legal Practice IA at 0.88x, Wood Casework FL at 0.98x) are the first sub-1x multiples in the four-week history. Whether this is sample noise or an emerging pattern will be tracked. The hypothesis to test is whether sub-1x listings cluster in particular categories (one-time-revenue businesses, RE-inclusive with overweighted property allocation, or distressed seller circumstances) or appear randomly across categories.

Healthcare appeared at n=2 this week with both listings showing meaningful internal variance (Implant Dental at 2.19x with RE, Med Spa at 8.33x without). Healthcare sub-segmentation will be needed once cumulative sample reaches n=5+.

SDE refers to Seller's Discretionary Earnings. Most listings in this cash flow range are priced against SDE. The broker's stated metric is used. Where a broker discloses EBITDA but not SDE (two listings this week: Med Spa AZ, Plumbing/HVAC Ohio), EBITDA is substituted for the multiple calculation.

Sample median is computed from US listings with disclosed financials and disclosed asking price. The Canadian listing this week (Diversity Recruiting Ontario) is excluded from sample median calculations because SBA financing is not available for Canadian operations, making the comparison set non-comparable. The listing is included in the sample for completeness and because it represents the market the broker chose to list it on.

Categories with n=1 are reported for transparency but not used for outlier identification. Sub-segmentation within Construction this week is illustrative; n=1 sub-segments do not produce meaningful medians.

Real estate included designates listings where the broker states the asking price includes ownership of the operating property. Where the broker discloses the property allocation explicitly, the implied operating multiple is reported alongside the blended multiple. For all other RE-inclusive listings, only the blended multiple is reported with a note that operating multiple cannot be calculated.

Margin implausibility refers to reported SDE or EBITDA figures that imply margins substantially above category norms. Such listings are retained in the sample for transparency but flagged in diligence commentary.

The EBITDA Report compiles public listing data. Not legal, financial, tax, or investment advice. Independent verification and professional diligence are required before any acquisition decision.

Published Tuesdays. Deal Diligence published Sundays.