What's the Most Common Type of Small Business Sale?

Hey ,

This week let’s get the actual statistics on small business acquisitions,

Smaller deals have a greater variety of deal structures, so I thought it would be helpful to give you the actual numbers for companies under $10m of revenue

First, Who Actually Sells?

Let’s start with a sobering stat: only 20–30% of small businesses that go to market ever close a deal.

That means for every 10 owners who decide “it’s time to sell,” only 2 or 3 will walk away with a signed purchase agreement and a wire transfer.

How Buyers Actually Pay

So what happens if you’re one of the lucky ones?

Here’s what the deal is likely to look like:

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1. Full Asking Price Cash at Close: 10-20% of Deals

Most deals have a cash-at-close component, but it rarely covers the full price. The average is 60–80% paid upfront, depending on deal size, industry, and how replaceable you are as the founder.

If your business runs smoothly without you, you’ll likely get more at closing. If the buyer needs you for a year of transition, expect more deferred payments.

Oh, and those “100% cash at close” exits everyone dreams about? They happen in only about 10–20% of deals. They're the exception, not the rule.

2. Seller Financing: Most Deals Include Some

This is the silent backbone of the small business market.

Roughly 60% to 80% of deals include seller financing, often covering 10–20% of the purchase price. That means you, the seller, are effectively lending money to the buyer—usually with a 3–5 year promissory note at 6–8% interest.

Why is this so common? Because it’s often the only way deals get done. Banks and SBA lenders usually only lend up to 50-75% of the purchase price, and buyers usually don’t have enough capital to fund the full price on their own.

3. Earn-Outs: Rare in Small Deals

Earn-outs—where a portion of the price is paid only if the business hits performance targets—are uncommon in this space.

Even in $5M–$50M deals, earn-outs peaked at just 10% of transactions during the worst of the credit crunch. In smaller, Main Street deals, they’re under 5%, often near zero.

Why? Because they’re complicated, messy, and often lead to disputes. Unless your business has big growth potential but unpredictable cash flow, most buyers would rather negotiate a lower price than gamble on an earn-out.

4. Leveraged Financing (LBOs): Less Common in Smaller Deals

Most buyers are using some form of debt to finance your sale.

In smaller deals (under $2M), about 17–26% of the purchase price typically comes from bank loans, most commonly SBA 7(a) financing.

In the $5M–$10M bracket, that jumps up to 42% or more being funded by debt, because banks feel the larger businesses are safer. Larger than $20m, leveraged buyouts become the norm.

For our size of business, you should assume about a quarter of deals are debt deals

It’s not Wall Street, but it works. And understanding this helps you structure your sale in a way that makes it easier to close.

Quick Tip

The bigger the deal, the less likely you’ll need seller financing but the more likely a debt/LBO deal is added

Market Pulse

Credit is slowly thawing, but deal creativity is still the norm. Expect to see:

• More use of seller notes

• Fewer earn-outs (except in tech or high-growth verticals)

• Increased reliance on SBA loans in deals under $5M

In short, the average deal is still cautious and risk-balanced—and sellers should plan accordingly.

Next Week

"Why Your Business Might Not Sell"
A brutally honest checklist of the 7 reasons most businesses fail to exit.

Here’s to Your Success,

Unlocking Wealth Weekly