Selling a Business in the New York Metro Area: What a $2M-EBITDA Owner Should Expect

The tri-state area has one of the densest concentrations of profitable, privately held, owner-operated businesses anywhere in the country — services companies in northern New Jersey, specialty manufacturers along the Hudson and Lehigh corridors, distributors serving Manhattan, healthcare and facilities services groups across Long Island, Westchester and Fairfield County. Many are owned by people in their sixties who have not yet decided what happens next.

If you are one of them, here is a realistic picture of what selling looks like.

What your business is probably worth

Valuation in this size range is driven less by industry and more by four things: quality of earnings, customer concentration, depth of management, and whether the revenue repeats.

Broadly, in the lower middle market:

• $1–2M EBITDA. Fewer institutional buyers can be bothered at this size, so pricing depends heavily on the buyer type you attract. Individual buyers, searchers and independent sponsors are the main pool.
• $2–5M EBITDA. This is the sweet spot for independent sponsors and smaller funds. Competition improves and multiples improve with it.
• $5M+ EBITDA. Institutional private equity engages seriously and a competitive process is worth running.

Discounts and premiums move the number more than the size does:

Factor	Effect on multiple
One customer over 25% of revenue	Significant discount, sometimes a deal-breaker
Owner is the top salesperson with no successor	Significant discount
Contracted or recurring revenue	Meaningful premium
Clean, reviewed or audited financials	Premium, and a much faster process
Deferred maintenance or capex catch-up	Deducted, usually dollar for dollar
A general manager who can run it without you	Meaningful premium

Two other things affect what you actually receive. Working capital is normally delivered at a normalised level at closing, and disagreements about what "normal" means routinely move six figures. And cash at close is not enterprise value — earnouts, seller notes and rollover equity are all things other than cash, and each should be valued for what it really is.

Who the buyers actually are

Strategic buyers. Competitors, suppliers, customers. Can pay the most where real synergies exist. Be clear-eyed: synergy frequently means your back office. Also consider what happens to your confidentiality if the deal does not close.

Private equity funds. Committed capital, institutional process, a fund clock that will eventually require a sale. Increasingly interested in the lower middle market as platform hunting has pushed downmarket.

Independent sponsors. Deal-by-deal capital, principal attention, flexible hold, no committed fund to draw on. Growing quickly — well over a thousand active in the US. Test their capital carefully. There is a fuller explanation in what an independent sponsor is.

Searchers and individual buyers. Often financed with an SBA loan, which caps deal size and adds process. They intend to run the business themselves, which is right for some sellers and wrong for others.

Family offices buying directly. Patient capital, sometimes indefinite hold periods, processes that can be slow and idiosyncratic.

Your own management team. An MBO can be the cleanest outcome for continuity, but usually needs outside capital to fund it, and can be difficult to price at arm's length.

The timeline

For a prepared seller, from decision to closing:

Phase	Duration	What actually happens
Preparation	1–3 months	Cleaning up financials, quality-of-earnings prep, assembling documents, addressing obvious problems
Marketing	1–3 months	Teaser and information memorandum out, management meetings, indications of interest
Negotiation to LOI	2–6 weeks	Selecting a buyer, agreeing headline terms and exclusivity
Diligence and documentation	60–90 days	Financial, legal, tax, insurance, environmental, IT, customer calls
Closing	—	Funds flow, escrows, working capital true-up to follow

Six to nine months is normal. Twelve is common. Anyone promising ninety days from a standing start is either unusually good or not being straight with you.

The mistakes that cost real money

Starting without clean financials. Cash-basis books, personal expenses mixed in, no monthly close discipline. Every hour of buyer confusion becomes a discount or a retrade. Get to accrual-basis reviewed statements before you start, ideally with two clean years behind you.

Not knowing your own adjusted EBITDA. You need a defensible schedule of add-backs with support for each one, prepared before a buyer's accountant asks. Aggressive add-backs you cannot document damage your credibility on everything else.

Waiting until you are exhausted. The best time to sell is when the business is growing and you still have energy for a nine-month process. The worst is when you have already checked out — buyers can smell it, and declining performance during diligence is the most common cause of a retrade.

Ignoring customer concentration until diligence. If one account is 30% of revenue, that is a valuation problem and a closing problem. It takes two or three years to fix and one afternoon to discover.

Having no management layer. If you are the only person who can quote a job, hold the key relationships, or close a sale, you are selling a job rather than a business. Promoting and empowering a general manager two years before a sale is the single highest-return preparation any owner can do.

Talking to one buyer and assuming the number is the market. Even if you prefer a discreet bilateral deal, get a second opinion on value from someone with no economic interest in the outcome.

Underestimating the tax structure. Asset sale versus stock sale, allocation across asset classes, state-level treatment in New York and New Jersey, and the timing of installment payments can swing your net proceeds substantially. This conversation belongs with your CPA before you sign an LOI, not after.

Do you need a broker or banker?

At $2M of EBITDA, a good sell-side advisor typically earns their fee — through competitive tension, process discipline, and by absorbing the work so you can keep running the company. Look for someone with genuine transactions in your size range and sector, and understand the fee structure, including any retainer and the tail period.

You do not always need one. If a buyer you trust approaches you directly with a fair number and continuity matters more to you than squeezing the last half-turn, a bilateral deal can be faster, quieter and less disruptive. In that case, invest in a transaction attorney and an independent valuation instead. What you should not do is negotiate the biggest financial event of your life with no professional in your corner.

If you want a straight read

Stella Maris Capital is an independent sponsor based in metro New York. We buy one profitable business at a time — $1.5 million to $6 million of EBITDA, across New York, New Jersey, Connecticut and eastern Pennsylvania, in business and industrial services, specialty manufacturing, value-add distribution, facilities services, healthcare services and niche B2B products.

If you want an honest opinion on what your business would attract and who the realistic buyers are, that is a half-hour phone call and it commits you to nothing. If we are not the right buyer, we will say so and tell you who is. Our full criteria are here, or call 973-397-5526.

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General information only, not investment, legal, tax or accounting advice. Speak to your own advisors about your situation.