America’s $5 Trillion Business Ownership Crisis

America is facing a business ownership crisis: 6 million small businesses will need new owners by 2035, and according to a McKinsey study titled The Great Ownership Transfer, 92% will simply close rather than sell.

The businesses most at risk have revenues between $1 million and $10 million — owner-operated firms spanning business services, regional manufacturing, and B2B specialties that are too small for institutional private equity and too complex for Main Street brokers. Together, they represent up to $5 trillion in enterprise value that will largely disappear unless buyers and sellers find each other in time. Rich Jackim predicted this wave in 2007 and co-founded the Exit Planning Institute to address it, training over 9,000 Certified Exit Planning Advisors — yet the majority of business owners still exit without a plan. For sellers, the window to transact at full value is narrowing every year; for buyers, the opportunity to acquire profitable, established businesses at reasonable prices has never been larger.

— Rich Jackim, Jackim Woods & Co.

McKinsey & Company just published a study that deserves attention from every business owner and serious business buyer in the country. The study, titled The Great Ownership Transfer, puts hard numbers to something I’ve been saying for nearly two decades: America is approaching a massive, largely unaddressed transition of business ownership — and most business owners aren’t ready for it.

The headline finding: 6 million small businesses will need new owners by 2035 as Baby Boomers retire. The sad news is that, according to McKinsey, 92% of these will not be sold and will simply shut their doors.  The good news is that this means at least 1 million are viable acquisition targets, representing up to $5 trillion in enterprise value.

I Saw This Coming in 2007

When I wrote the critically acclaimed book, The $10 Trillion Opportunity, this demographic wave was already clearly on the horizon. The math was never complicated: the largest generation of entrepreneurs in American history, the Baby Boomers, would eventually retire, and the buyer infrastructure to acquire these lower-middle-market businesses was not well developed.

That book led me to co-found the Exit Planning Institute, and to create the Certified Exit Planning Advisor (CEPA) designation — a program that has now trained more than 9,000 graduates and helped establish exit planning as a recognized professional discipline. Entire conferences, curricula, and consulting practices have been built around it.

And yet — despite all of that progress — the majority of business owners still exit without a plan in place. The McKinsey data makes that painfully clear: 92% of small business exits or sales today will end in closure. Not sale. Not succession. Closure. Let that sink in.

Profitable companies with real customers, trained employees, and decades of hard-earned reputation — simply shutting their doors because no qualified buyer stepped forward in time.

The Forgotten Core of the American Economy

The businesses most exposed to this risk share a common profile: revenues between $1 million and $10 million, spanning business service providers, regional manufacturers, and B2B specialists. These are owner-operated firms that have quietly powered local economies and supply chains for decades.

They’re too small to attract institutional private equity. Too complex for Main Street business brokers. And too often overlooked by the buyers who could give them a real future. It’s a structural gap hiding in plain sight — and it’s where the closure problem is most acute.

What This Means for Buyers & Sellers

Here’s the other side of the equation that doesn’t get discussed enough.

We talk with a lot of prospective buyers every day. And while well-run businesses with strong fundamentals cross our desk regularly, most buyers aren’t in the market for a good company. They’re searching for the right one — the one that checks all the boxes, including the right combination of timing, fundamentals, and transformative upside.

The challenge is that “right” means different things to different buyers. The right fit depends on the buyer’s background, industry experience, capital structure, growth thesis, and risk tolerance. That means if you are buyer, finding your right acquisition or isn’t a passive exercise. The same applies if you are a seller.  It requires extensive, targeted research and outreach — two things we do every day.

The Bottom Line

This is precisely the space that Jackim Woods & Co. was built to serve. Paul, Jim, and I have spent years developing the relationships, the methodology, and the market intelligence to move these businesses from owner-operated to professionally transitioned — without watching them quietly disappear.The Great Ownership Transfer is not a future event. It’s happening now. Every year that passes without a transaction plan is a year closer to a closure that didn’t have to happen.

If you’re a business owner thinking about your exit — whether in two years or ten — the time to start the conversation is now, before urgency forces your hand.

Contact us at Jackim Woods & Co. We’re happy to help you explore your options, help you develop a plan, and help you find the right buyer for your business. Reach us at jackimwoods.com or contact Rich directly to start the conversation.

2025 M&A Market Overview: What Business Buyers and Sellers Need to Know

The business brokerage landscape in 2025 tells a story of steady growth and selective optimism. After analyzing nearly 10,000 closed transactions representing nearly $8 billion in enterprise value, our research reveals a market that’s maturing with purpose—where buyers are more discerning, and sellers who prepare properly are being well rewarded.

A Market Finding Its Footing

This past year saw 9,586 transactions close, a modest but meaningful 0.4% increase from 2024. While that growth rate might seem incremental, it signals something important: stability, which is crucial amid market disruptions stemming from Trump’s tariffs and immigration enforcement policies, which have caused tremendous uncertainty across our economy.

Another important indicator is that the total enterprise value of $7.95 billion is up 3% year-over-year, demonstrating that deal sizes are expanding even as transaction volume holds relatively steady.

For sellers, the headline number is encouraging: the median sale price reached $350,000, a 2% increase that outpaced inflation in many sectors. More telling is that businesses are selling at an average of 94% of their asking price, suggesting that well-priced, well-prepared businesses marketed by professional business brokers are finding buyers willing to meet them close to their expectations.

The Valuation Story: Cash Flow Still Commands a Premium

Our research relies heavily on closed transaction data from the BizBuySell and our own internal database of closed transaction, which tends to focus on smaller, “main street” types of businesses, with revenues of less than $2 million.  For these small companies, valuation multiples reveal where buyer confidence truly lies.

The average cash flow multiple climbed to 2.61—a 1% increase that may seem small but represents real dollars when applied to six-figure earnings. With median cash flow of $158,950 (up 3%), sellers with strong, documented profitability are in the driver’s seat.

Revenue multiples also ticked up to 0.69, a 2% gain, while median revenue reached $703,000. This suggests buyers are willing to pay more for top-line growth, but the stronger appreciation in cash flow multiples confirms what savvy sellers already know: profit matters more than revenue when it comes to valuation.

Size Premium: It is important to note that larger companies sell for higher multiples of EBITDA and Revenue due to a size premium.  Buyers view larger companies as much less risky then smaller companies so if your business is generating more than $5M in revenue and more than $1M in EBITDA, you can expect your company to be valued at between 4x and 9x EBITDA, depending on the type of business you have and the industry you operate in.

Where the Action Is

Geography continues to play a decisive role in market velocity. Florida led all states in transaction demand, followed by California, Texas, Arizona, and New York.

These aren’t just population centers—they’re business hubs with favorable demographics and diverse economies that create both buyer pools and acquisition targets.

Sector Spotlight: The Reliable and the Rising

Service businesses dominated the closed deal landscape, claiming the top spot ahead of retail, restaurants, and manufacturing. The prevalence of service businesses reflects their scalability, lower capital requirements, and often more predictable cash flows—qualities that resonate in an environment where buyers are prioritizing stability.

But the real story lies in the rising business types that are capturing increasing buyer attention.

• Financial services
• Technology services
• Cafe and coffee retailers
• Beauty and personal care businesses

These sectors share common threads: recurring revenue potential, demographic tailwinds, and business models that have proven resilient through recent economic uncertainty.

What This Means for Sellers

If you’re considering an exit in the next 12 to 24 months, this data offers a roadmap. Buyers are active, valuations are holding, and well-run businesses in the right sectors are commanding strong multiples. The key is preparation: clean financials, documented cash flow, and a clear growth story will position you to capture that 94% (or better) of asking price.

The market rewards businesses that can demonstrate consistent performance, particularly in cash flow. With multiples trending upward, even incremental improvements in profitability can translate to meaningful differences in your final sale price.

What This Means for Buyers

For buyers, the landscape demands strategic discipline. With sale prices hovering near asking prices, there’s less room for bargain hunting, but opportunities exist for those who can move decisively on quality businesses. The rise in cash flow multiples means you’ll need to justify higher purchase prices with clear paths to growth or operational improvements.

The emerging sectors—financial services, technology, specialty retail like coffee shops, and beauty services—represent areas where market momentum may create additional upside beyond the acquisition.

Looking Ahead

The 2025 market isn’t about explosive growth or dramatic shifts. It’s about a maturing marketplace where quality businesses find quality buyers, where valuations reflect realistic expectations, and where the fundamentals—profitability, documentation, and preparation—determine outcomes.

At Jackim Woods & Co., we help clients navigate this landscape with clarity and purpose. Whether you’re building toward an exit or searching for the right acquisition, understanding these market realities is where successful transactions begin.

The data speaks. The question is: are you ready to act on it?

About the Author and Jackim Woods & Co.

Rich Jackim is an investment banker, entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to small and lower middle-market companies in a wide range of industries across the United States and Canada.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 120 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a business and are interested in exploring your options, I would welcome an opportunity to speak with you.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Jackim Woods & Co. Leads Buy-Side Roll-Up in the CDL Training Sector

When a large Title IV vocational college set out to acquire multiple commercial-driver-license (CDL) training schools, they turned to Jackim Woods & Co. for a focused, results-driven buy-side campaign — and we delivered. Below is how we helped them navigate complexity, act with speed, and close acquisitions that strengthen their national footprint.

What the Mandate Was

Our client’s objective was to acquire one or more high-quality CDL training providers in key U.S. states, to build scale quickly as part of a national roll-up strategy. Their criteria were strict: geographic location, size, proximity to major airports (for future logistics), and the potential for seamless integration into a growing national CDL division.

Our client had a regulatory and strategic mandate to close by end of 2025, and to hit a combined CDL-division revenue target of at least $6 million. By working swiftly and eliminating unnecessary delays, we met those targets, positioning our client for full compliance — and for accelerated growth.

Our role at Jackim Woods & Co. was to represent the buyer, source targets, and manage the acquisition process from first outreach through closing.

The first CDL acquisition we helped them close was CL Driving Academy — a premier commercial driver training center located in Charlotte, NC. Three months later, we helped them acquire Apex Technical Institute, a leading CDL school in Kansas City, KS.

How We Worked: Our Value-Added Buy-Side Process

1. Highly Targeted & Data-Driven Deal Sourcing
   We began with a broad universe — roughly 693 potential CDL school targets — then filtered that down to around 300 that met our client’s criteria (geography, size, infrastructure, airport proximity, and more). This data-driven screening ensured that we spent the client’s time on only the most promising candidates.
2. Proactive Outreach & Seller Engagement
   Using a mix of personalized emails and phone outreach, we contacted each owner/operator in the filtered target list. That initial campaign produced 15 schools interested in further discussion.
   We then conducted introductory calls with 12, arranged six conference calls between our client and potential sellers — and helped formulate offers on two schools
3. Fast, Focused Execution & Negotiation
   In the case of CL Driving Academy, our campaign from first contact to closing wrapped up in just 92 days.

   For Apex Technical Institute, the process took 184 days — a slightly longer timeline because we needed to negotiate a post-closing employment contract with the owner to assume a leadership role and manage our client’s multi-state CDL division.

4. Strategic Integration Planning (Owner-Operator Retention)
   Recognizing the importance of leadership continuity in a roll-up, we helped our client identify a strategic leader who could help them manage their growing CDL division. negotiate a deal structure that retained the prior owner of Apex Technical Institute — bringing him in as Divisional Vice President for the new national CDL business. This eased transition, preserved institutional knowledge, and boosted the credibility of the combined enterprise.

Outcome & What It Means

Thanks to our buy-side advisory, our client successfully acquired two high-quality CDL training schools, giving them an immediate multi-state presence in a consolidating industry. More importantly, they gained not just assets — but operational leadership and a scalable platform for future acquisitions.

From a strategic perspective, this gives them:

• A streamlined path to national scale in the fragmented CDL training market.
• Operational leverage via back-office and administrative consolidation.
• Enhanced negotiating power with large carriers or employers seeking to hire CDL-trained graduates.
• A foundation to continue roll-up efforts — strengthened by credibility, cash capital, and a proven acquisition process.

Why Jackim Woods & Co. Was the Right Partner

Our success hinged on combining deep domain expertise with disciplined process execution:

• We know the vocational education and CDL-training sector — enabling us to build immediate credibility with school owners.
• We executed a comprehensive, data-driven target search — not a scattershot approach.
• We engaged directly and persistently with owners, building trust and opening doors for negotiation.
• We drove speed without sacrificing due diligence or post-closing strategy.

If you’re a buyer seeking to acquire assets in a fragmented sector — whether education, vocational training, logistics, or other specialized services — we offer a proven, structured buy-side process that gets results.

Meet the Dealmaker Behind the Strategy

Richard Jackim is founder of Jackim Woods & Co and the head of our education group. A former Wall Street attorney and bulge-bracket investment banker, Richard has advised on over 120 transactions totaling more than $2.3 billion in market value. Since he founded the Exit Planning Institute and sold it in 2012, he has focused on privately-held small and mid-sized companies in the education sector — including vocational schools, training and certification providers, edtech companies, and niche educational assets. He is a frequent author of white papers on education M&A and has spoken at industry summits.

Contact us to Learn More

If you represent a private equity firm, vocational college, or strategic buyer — and considering making an acquisition in education, training, or other specialized sectors — reach out. We’ll build a tailored buy-side acquisition campaign designed to move with speed, discretion, and strategic clarity.  Contact: Rich Jackim at rjackim@jackimwoods.com

FedEx Linehaul Carriers: A Complete Guide to Opportunities, Risks, and Valuation

Introduction: Understanding FedEx Linehaul Acquisition Opportunities

The logistics sector has experienced unprecedented growth, driven by e-commerce expansion and changing consumer behaviors. Within this landscape, FedEx linehaul carriers represent a unique investment opportunity that combines the stability of the FedEx brand with the entrepreneurial potential of independent operations. For investors and business buyers considering this sector, understanding the intricacies of linehaul operations is crucial for making informed decisions.

Unlike traditional pickup and delivery (P&D) routes that serve local markets, linehaul carriers operate the backbone of FedEx’s transportation network, moving packages between major distribution centers across interstate corridors. This comprehensive analysis examines the investment merits, risks, and valuation considerations for prospective buyers in this specialized market segment.

What Are FedEx Linehaul Carriers?

FedEx linehaul carriers are independent service providers (ISPs) that contract with FedEx Ground to provide interstate transportation services. These operations involve moving trailers loaded with packages between FedEx facilities, typically during overnight hours when traffic congestion is minimal and highway capacity is optimized.

Key Operational Characteristics

Linehaul operations differ significantly from local delivery routes in several fundamental ways:

Transportation Method: Linehaul carriers utilize tractor-trailers rather than delivery trucks, requiring commercial driver’s licenses (CDL) and specialized equipment.

Operating Schedule: Most linehaul routes operate during evening and overnight hours, maximizing highway efficiency and supporting FedEx’s next-day delivery commitments.

Geographic Scope: Routes typically cover hundreds of miles between major metropolitan areas, creating predictable, high-volume transportation corridors.

Service Model: Rather than interacting with end customers, linehaul carriers focus purely on transportation logistics between FedEx facilities.

The Investment Case: Advantages of FedEx Linehaul Carriers

1. Premium Revenue Generation

Linehaul operations typically generate higher revenue per mile compared to local delivery routes. The interstate nature of these operations, combined with the specialized equipment and CDL requirements, commands premium pricing from FedEx Ground.

2. Operational Efficiency

The point-to-point nature of linehaul routes creates several efficiency advantages:

• Predictable Routes: Consistent origin and destination points eliminate route planning complexity
• Economies of Scale: Large trailer capacity maximizes revenue per trip
• Reduced Customer Interface: Minimal customer service requirements compared to delivery operations

3. Brand Leverage and Market Position

Operating under the FedEx Ground umbrella provides immediate credibility and market access. The FedEx brand recognition eliminates customer acquisition costs and provides access to one of the world’s largest logistics networks.

4. Contractual Revenue Stability

FedEx linehaul contracts typically offer multiple payment structures that provide revenue predictability:

• Annual Fixed Fees: Guaranteed base revenue regardless of volume fluctuations
• Per-Mile Compensation: Variable payments based on actual miles driven
• Performance Incentives: Additional compensation for meeting safety and service standards

5. Market Growth Tailwinds

The continued growth of e-commerce and supply chain complexity supports long-term demand for linehaul transportation services. FedEx’s market position and network expansion provide natural growth opportunities for contractors.

Investment Risks and Challenges

1. Significant Capital Requirements

Linehaul operations demand substantial upfront investment across multiple categories:

Equipment Costs: Tractor-trailers represent major capital expenditures, with new equipment costing $150,000-$200,000 per unit. Even used equipment requires significant investment and ongoing maintenance.

Working Capital: Fuel costs, insurance, and employee expenses create substantial working capital requirements before revenue generation begins.

2. Regulatory and Compliance Complexity

Interstate transportation involves extensive regulatory oversight:

DOT Compliance: Department of Transportation regulations require comprehensive safety programs, driver qualification standards, and vehicle maintenance protocols.

Hours of Service: Federal regulations strictly limit driver hours, creating scheduling complexity and potential capacity constraints.

Insurance Requirements: Commercial vehicle insurance costs can be substantial, particularly for newer operations without established safety records.

3. Operational Risks

Several operational factors can significantly impact profitability:

Driver Shortage: The nationwide CDL driver shortage creates recruitment challenges and wage inflation pressure.

Fuel Volatility: Diesel fuel represents a major variable cost, with price fluctuations directly impacting margins.

Equipment Downtime: Mechanical failures can disrupt operations and create expensive emergency repairs or equipment substitution costs.

4. Market Dependency

Linehaul carriers face inherent risks from their dependency on FedEx Ground:

Contract Renewal: ISP agreements require periodic renewal, creating potential business continuity risks.

Route Changes: FedEx retains the right to modify routes or service requirements, potentially impacting operational efficiency.

Volume Fluctuations: Economic downturns or changes in shipping patterns can reduce package volumes and corresponding revenue.

Valuation Guidelines for FedEx Linehaul Carriers

Standard Valuation Multiples

Based on recent market transactions, FedEx route businesses typically trade within established multiple ranges:

Seller’s Discretionary Earnings (SDE) Multiple: 2.9x – 3.5x

• Most commonly used metric for smaller operations
• Includes owner salary and discretionary expenses
• Provides direct comparison for owner-operator situations

EBITDA Multiple: 3.60x – 4.2x

• Preferred for larger operations with professional management
• Normalized metric allowing better comparative analysis
• More relevant for institutional investors

Revenue Multiple: 0.60x – 0.91x

• Useful for initial screening and market comparison
• Less precise but helpful for quick valuation estimates

FedEx Market Multiples as of August 2025

Source: BrokerWorks and Jackim Woods Research

Valuation Adjustments for Linehaul Operations

FedEx linehaul carriers typically warrant premium valuations compared to standard P&D routes due to several factors:

• Higher Barriers to Entry: CDL requirements and equipment costs limit competition and support pricing power.
• Scalability Advantages: Route density and equipment utilization create operational leverage opportunities.
• Reduced Labor Intensity: Fewer employees per dollar of revenue compared to delivery-intensive operations.

Key Valuation Factors

When assessing the potential value of a FedEx linehaul carrier examine the following characteristics carefully:

• Revenue Quality: Analyze the mix between fixed fees and variable compensation to assess revenue stability.
• Route Characteristics: Premium routes with favorable distances, timing, and facilities access command higher multiples.
• Equipment Condition: Well-maintained, newer equipment reduces capital expenditure requirements and supports higher valuations.
• Driver Retention: Low turnover rates indicate operational stability and reduced recruitment costs.
• Safety Record: Clean DOT safety scores and insurance claims history support premium valuations.
• Contract Terms: Remaining contract length and renewal probability significantly impact investment value.

Due Diligence Considerations

Financial Analysis

As part of your due diligence of a possible FedEx carrier, your comprehensive financial review should include:

• Three-year financial statements including profit and loss, balance sheets, and cash flow statements
• Tax returns for verification of reported income
• Route-level profitability analysis for multi-route operations
• Working capital requirements and seasonal variations

Operational Assessment

You should also include the following critical operational factors:

• Equipment maintenance records and replacement schedules
• Driver qualification and retention statistics
• Safety compliance history and DOT inspection records
• Insurance claims history and current coverage adequacy

Market Position Analysis

Understanding competitive position requires evaluation of:

• Route exclusivity and territorial protection
• Service performance metrics versus FedEx standards
• Growth opportunities within existing territory
• Competitive threats from other transportation providers

Deal Structure Considerations

Financing Options

Linehaul carrier acquisitions typically utilize multiple financing sources:

• Seller Financing: Often available for 10-30% of purchase price, providing favorable terms and demonstrating seller confidence.
• SBA Loans: Government-backed lending can provide attractive rates and long repayment terms for qualified buyers.
• Equipment Financing: Separate financing for vehicles and equipment can optimize overall capital structure.

Ownership Structure

Consider optimal ownership structures for tax efficiency and operational flexibility:

Corporate Structure: Required for FedEx ISP agreements, typically S-Corporation or LLC election.

Asset vs. Stock Purchase: Asset purchases often preferred for tax benefits and liability limitation.

Market Outlook and Investment Timing

Industry Growth Drivers

Several long-term trends support continued growth in linehaul transportation:

• E-commerce Expansion: Online retail growth drives package volume increases
• Supply Chain Reshoring: Domestic manufacturing trends increase interstate transportation demand
• Last-Mile Delivery Growth: Hub-and-spoke networks require increased linehaul capacity

Competitive Landscape

FedEx Ground’s market position provides defensive characteristics:

• Network Effects: Comprehensive coverage creates competitive moats
• Brand Recognition: Consumer preference for reliable delivery services
• Operational Excellence: Sophisticated logistics capabilities are difficult to replicate

Conclusion: Strategic Investment Considerations

FedEx linehaul carriers represent a compelling acquisition opportunity for buyers seeking exposure to the growing logistics sector while benefiting from established brand recognition and operational infrastructure. The combination of premium revenue generation, operational efficiency, and market growth drivers creates an attractive investment profile.

However, success requires careful attention to the substantial capital requirements, regulatory complexity, and operational risks inherent in interstate transportation. Prospective investors should work with a mergers and acquisitions advisors who had experience in the sector to value each opportunity correctly, structure a deal properly, conduct comprehensive due diligence, and  secure appropriate financing before committing to this sector.

The valuation multiples and financial characteristics outlined in this analysis provide a framework for evaluating opportunities, but each investment should be assessed based on its unique operational characteristics, market position, and growth prospects. With proper planning and execution, FedEx linehaul carriers can provide stable cash flow and attractive returns for well-capitalized investors with transportation industry expertise.

If you are looking to buy or sell a FedEx linehaul or P&D route operation, we would welcome an opportunity to speak with you and share our expertise.  There is no cost or obligation for an initial consultation and all conversations are strictly confidential.

About the Author and Jackim Woods & Co.

Rich Jackim is a trucking industry investment banker, entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in a wide range of industries. He began focusing on the trucking and transportation sector in 1997 and wrote the Guide to Value Your Trucking Company, published by the American Trucking Association from 1998-2004.

Based on his successful career and unique way of working with clients, Rich wrote the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

This book led Rich to founded a training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich and his team at Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned trucking and transportation companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 120 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a trucking or transportation company and are interested in exploring your options, I would welcome an opportunity to speak with you.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

The New SBA Landscape in 2025: How Recent Policy Changes Are Reshaping Business Acquisitions

The Small Business Administration’s recent policy overhaul has fundamentally altered the business acquisition financing landscape, creating new challenges and opportunities requiring strategic adaptation from buyers and sellers.

The Policy Shift: From Flexibility to Financial Discipline

In April 2025, the SBA implemented sweeping changes, reversing the previous administration’s “Do What You Do” underwriting standards that had been in place since 2021. These changes came in response to a critical financial situation: the 7(a) loan program recorded its first negative cash flow in 13 years, with losses reaching $397 million in fiscal year 2024.

The new Standard Operating Procedure (SOP 50.10.8), effective June 1, 2025, represents a return to the stricter underwriting criteria that previously kept the program financially stable and self-sustaining through lender fees.

Key Changes Impacting Business Acquisitions

Enhanced Underwriting Requirements

The updated rules have restored rigorous credit analysis processes, requiring lenders to apply the same scrutiny to SBA-guaranteed loans as they would to conventional commercial lending. This includes enhanced citizenship and ownership verification requirements, stricter debt service coverage ratios, and more comprehensive financial documentation.

Seller Financing Restrictions Create New Challenges

Perhaps the most significant impact on business sales involves the new limitations on seller financing arrangements. Under the current rules, seller notes can now cover only 50% of the required buyer equity injection, typically 10% of the total project cost. This effectively means seller financing can represent just 5% of the transaction value.

More restrictively, qualifying seller notes must remain on “full standby” throughout the entire SBA loan term—often 10 years—with no principal or interest payments. This arrangement essentially converts seller financing into an unsecured, zero-interest loan, significantly reducing its attractiveness to business owners.

Personal Guarantee Requirements Intensify Risk

Any seller retaining even minimal equity ownership must now personally guarantee the entire SBA loan for a minimum of two years. This provision closes previous loopholes and ensures all parties maintain substantial financial exposure in the transaction. This will make it very unattractive for sellers to retain any equity in the businesses they are selling.  This seems counterproductive, since the traditional view has always been that a seller retaining equity helps ensure the success of the business and the buyer, which helps ensure repayment of the SBA loan, and therefore benefits everyone.  But this rule change effectively eliminates that option.

Structural Requirements Shift Tax Implications

All partial ownership transfers must now be structured as stock sales rather than asset sales, introducing new tax considerations and liability implications that require careful legal and tax planning.

Market Impact: The Numbers Tell the Story

The effects of these changes are already measurable in the marketplace. Recent industry surveys reveal that 41% of business brokers report transaction delays directly attributable to the new SBA policies. Supporting this trend, the average time to close business sales increased by 30 days year-over-year in the second quarter.

This creates a challenging environment given the existing disconnect between buyer expectations and seller expectations. While 62% of buyers expect seller financing as part of their acquisition strategy, only 23% of sellers are willing to offer it under the new restrictive terms.

Perhaps most concerning for market participants: while 68% of surveyed buyers are considering SBA financing for their acquisitions, more than half (55%) remain unaware of these significant regulatory changes.

Strategic Recommendations for Buyers and Sellers

For Business Sellers

Working with experienced advisors has never been more critical. Sellers should understand that certain structuring approaches can mitigate some restrictions. For instance, seller financing provided in addition to (rather than as part of) the buyer’s equity injection may not be subject to the same standby requirements, potentially allowing for more favorable terms.

Realistic pricing becomes essential in this environment. As financing options become more constrained, businesses must be competitively priced to attract serious buyers who can meet the enhanced equity requirements.

For Business Buyers

Preparation and financial readiness are paramount. The days of relying heavily on seller financing to bridge equity gaps have ended. Successful buyers in this environment will need to demonstrate substantial capital availability and obtain pre-qualification from SBA lenders before entering the market.

The ability to move quickly when opportunities arise has become a competitive advantage. Buyers who can present proof of available cash and pre-approved financing will have significant advantages in negotiations.

Industry Expert Perspective

Rich Jackim of Jackim Woods & Co. says these changes emphasize the importance of buyer preparedness: “There is a great deal of demand for solid, performing businesses—those that are profitable, have experienced employees, are not owner dependent, and are reasonably priced. Don’t start your conversation with the seller or his broker by asking, ‘Will the seller provide any seller financing?’  Ninety percent of the time, the answer will be ‘no,’ and you lose credibility as a qualified buyer.”

Jackim continues, “To improve your chances of winning the deal, get your financing in order before you start your search, so when you find a great business you can include proof that you have the financing lined up to close a deal. This immediately proves to a seller that you are serious, qualified, and have a high probability of closing, which in turn increases your negotiating leverage.”

Looking Forward: Adaptation and Opportunity

While these changes create immediate challenges, they also represent a return to financial discipline that should strengthen the long-term viability of the SBA lending program. The restrictions, though stringent, aim to protect taxpayers while maintaining access to capital for qualified small business acquisitions.

Success in this new environment requires understanding that deal structure has become more critical than ever. Both buyers and sellers must work closely with experienced advisors who understand the nuances of the updated regulations and can identify creative solutions within the new framework.

The market will likely adapt, with pricing and expectations adjusting to reflect the new financing realities. Those who prepare early and understand the new rules will be best positioned to capitalize on opportunities in this evolving landscape.

About the Author and Jackim Woods & Co.

Rich Jackim is an investment banker, entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in a wide range of industries across the United States and Canada.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 120 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a business and are interested in exploring your options, I would welcome an opportunity to speak with you.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

This article is also available on LinkedIn.

SBA Payment Forgiveness Expected to Fuel Acquisitions in 2021

As was the case last year, COVID-related federal stimulus benefits are expected to be a powerful catalyst driving deal activity in 2021.

On December 27, 2020, Congress passed the Consolidated Appropriations Act, 2021, a $2.3 trillion stimulus bill, with $900 billion targeted specifically for COVID-19 relief. A portion of these funds will be used to extend the popular 2020 CARES Act SBA Debt Relief program.

According to Rich Jackim, Managing Partner of Jackim Woods & Co, the extension includes significant benefits that provide buyers with powerful incentives to acquire a business in 2021, including:

• Six months of payment forgiveness for SBA 7(a) loans closed after February 1, 2021, and before September 30th, 2021. This includes principal and interest up to a maximum of $9,000 per month. That’s a $54,000 benefit to buyers.
• The SBA will waive the guaranty fee that must be paid by borrowers. This fee is typically around 3% of the loan amount and will now be zero for loans closed before September 30th, 2021. That’s an average saving to buyers of approximately $4,500.
• The SBA is increasing the amount of loan guarantees to lenders from 75% to 90%. This will decrease the risk to lenders and help ensure liquidity for deal financing.

Jackim urges buyers who want to take advantage of the extension to learn from the mad rush to meet last year’s deadline. It required tremendous coordination between sellers, buyers, counsel, intermediaries, and lenders. “The lesson buyers learned last year is not to procrastinate and try to close at least 30 days before the deadline to accommodate potential delays,” says Jackim.

What does this mean for sellers? If you are thinking of selling your business, now may be the right time despite the pandemic. In addition to record low interest rates, the SBA Payment Forgiveness Program provides buyers with extremely low financing costs. Last year we sold two businesses for over asking price because the buyers were able to afford to pay more due to the 2020 SBA Payment Forgiveness Program. Once the pandemic is under control, it is unlikely buyers will have access to the same generous funding they have today.

To learn more about taking advantage of the 2021 SBA Payment Forgiveness Program contact Rich Jackim at 224-513-5142 or at rjackim@jackimwoods.com.

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