Investment Thesis
Why we buy small businesses from retiring owners, what we look for, and where we pass.
Market Opportunity
$7.4 trillion in small business assets are held by owners approaching retirement, creating a sizeable supply of attractive businesses for sale. The SBA 7(a) program lends up to 90% of the purchase price, and most of these businesses are too small for institutional private equity to look at.
$7.4T Succession Wave
51% of small business owners are 55 or older. There are more good businesses for sale than buyers ready to buy them, and most are too small for institutional PE.
Favorable Deal Economics
Purchase multiples of 3x–5x (vs. 10x+ in traditional PE), government-backed leverage up to 90% LTV, and buyer negotiating leverage from active management requirements.
Technology Transformation
Most small businesses run on spreadsheets and manual processes. Moving them onto modern software and automation is a real source of value after close.
What we buy, at a glance
- EBITDA
- $500K–$5M
- Operating history
- 10+ years of profit
- Business type
- B2B services & products
- Geography
- North America
Three Investment Themes
Every deal is tested against these three themes.
Staying Power
We identify companies with sustainable earnings power that can endure challenging environments. Businesses that have come through more than one economic cycle, with steady revenue and essential products or services, are less exposed to a sudden drop in demand or to becoming obsolete.
Incentive Alignment
Stakeholders have aligned economic incentives and the operator is well-positioned to execute strategic priorities. We set up governance so everyone answers to the investors.
Asymmetric Bet
We invest only when our model shows a realistic path to a large return and a downside case we can live with.
Investment Criteria
What a company and a deal need before we invest.
The Company
Essential Products & Services
Companies providing essential products and services with low EBITDA volatility, selling into attractive end-markets.
$500K–$5M EBITDA
Profitable businesses with sustainable growth and margins, too small for institutional PE but large enough to support professional management.
10+ Years Operating History
Demonstrated resilience through economic cycles. Businesses that have endured prove they can continue to endure.
HQ in North America
Headquartered in North America with well-aligned management and clear paths to sustainable growth.
The Acquisition
40–70% Leverage
Prudent capital structures that balance leverage with investor protections and operational stability.
Aligned Incentives
Economics aligned between buyer and investors, with shareholder rights, robust protections, and terms that create an asymmetric risk-return profile.
Technology Opportunity
Room to improve with technology or add-on acquisitions, two areas where SFV can help directly.
The operator runs the business
The operator stays in charge. We bring structure, specialists and hands-on help, and we work on the risks that sink small-business deals.