If you’re buying your first business, there’s a good chance you’ve already run into conflicting advice, outdated assumptions, and well-meaning but misleading hot takes from internet forums or your broader network.
The truth is, small business M&A doesn’t work like buying real estate or investing in public stocks. It’s messy, personal, and often more art than science.
To help you cut through the noise, here are 10 common myths that trip up first-time buyers—and what the reality looks like on the ground.
“If the business qualifies for an SBA loan, it must be solid.”
The myth: The bank did their homework, so the business must be safe.
The reality: Banks care about one thing: whether the loan gets repaid. Their diligence is limited to cash flow and collateral—not operational risk, cultural fit, or long-term viability. A business can meet SBA lending criteria and still have major issues lurking under the surface.
You still need to conduct your own diligence to ensure you’re buying something you actually want to run. Don’t outsource your judgment to your lender.
“The seller’s add-backs are all legitimate.”
The myth: Everything added back to EBITDA is fair game.
The reality: Sellers often stretch the definition of “add-back” to inflate earnings. Personal expenses? Maybe. One-time legal costs that happen annually? Probably not. The more aggressive the add-backs, the more skeptical you should be.
Your job is to validate what’s truly discretionary and what will continue post-close. A bloated adjusted EBITDA can lead to overpaying for performance that doesn’t exist.
“A lower purchase price always means a better deal.”
The myth: Get the lowest price possible to maximize ROI.
The reality: Structure matters just as much. Paying more with seller financing, earnouts, or escrow protections could be a smarter move than paying less with all cash and no safeguards. A deal’s headline price is only one variable in the equation.
Focus on total deal terms—including payment timing, protections, and risk allocation—not just what’s on the front page.
“All the value is in the numbers.”
The myth: As long as the financials work, the deal is good.
The reality: You’re not just buying a P&L—you’re buying people, systems, relationships, and risk. Soft factors like owner dependency, employee culture, and customer relationships can make or break your success.
A business with solid numbers but fragile operations can turn into a post-close headache quickly. Financials matter, but they’re just one piece of the puzzle.
“Once the LOI is signed, we’re almost done.”
The myth: The hard part is over once the seller accepts your offer.
The reality: LOI is just the beginning. Diligence, financing, legal, and emotional hurdles still lie ahead. Many deals fall apart post-LOI due to uncovered issues, shifting expectations, or poor communication.
Keep your foot on the gas after the LOI. The real work—and the real risk—starts there.
“If the seller is retiring, they’ll be flexible.”
The myth: A retiring seller just wants to move on and will accept reasonable terms.
The reality: Some do. Others want top dollar, minimal involvement post-close, and an all-cash exit. Retirement doesn’t always mean low resistance. For many sellers, this is their nest egg and they’re emotionally attached to both the business and the payout.
Understand the seller’s true motivations—not just what they say in the CIM. Probe gently but clearly.
“The seller will stick around to help me transition.”
The myth: The seller will train me for 6–12 months and ease the handoff.
The reality: Many sellers mentally check out the day the wire hits. Unless it’s in writing (and compensated), don’t count on extended support. Good intentions often fade quickly once the deal is closed.
Build contingencies into your transition plan in case you’re flying solo sooner than expected. Have backup support ready to go.
“Smaller businesses are easier to buy and operate.”
The myth: Less revenue = simpler deal.
The reality: Smaller businesses often have less structure, more owner dependency, and messier books. They may lack standard operating procedures, consistent reporting, or professional staff. You may have fewer employees—but you’ll wear more hats, often at once.
Sometimes, buying a slightly larger, better-run business is less risky than trying to fix a broken one.
“I can rely on the broker to guide the process fairly.”
The myth: The broker will act as a neutral advisor.
The reality: Brokers represent the seller. Their job is to get the deal closed at the best possible terms for their client. Some are helpful and transparent. Others aren’t. Even the best brokers are incentivized to get to the finish line quickly.
Always conduct your own diligence and negotiate as if no one else has your back. Because in most deals, no one does.
“If I pass on this deal, I may not find another.”
The myth: Good businesses are so rare, I can’t afford to walk away.
The reality: Deal scarcity is real—but so is buyer regret. Making a bad acquisition because you’re afraid you won’t find another is a recipe for frustration and financial loss. A bad deal can cost you more in time, money, and stress than waiting for the right one.
Stay patient. A good deal will stand up to diligence. A great one won’t fall apart when you ask hard questions.
Final Thoughts
The best way to become a savvy buyer? Know where others trip up. M&A isn’t just about numbers—it’s about people, incentives, and risk. You can’t shortcut experience, but you can learn from others’ mistakes.
Approach each deal with a clear mind, ask uncomfortable questions, and don’t be afraid to challenge assumptions—including your own.
Because the real myth? That your first deal has to be perfect. It doesn’t. But it does need to be right for you.
Contact us today or book a free consultation and learn how we can be a trusted partner on your next deal!
