Every Owner Path term, plainly defined.

SBA 7(a) loan

The U.S. Small Business Administration's flagship loan-guarantee program. The SBA itself doesn't lend you money — it guarantees up to 75-85% of a loan made by a participating bank. That guarantee is what gets a deal approved at terms the bank wouldn't offer on its own merit.

Loan amounts up to $5 million. Typical structure for small-business acquisitions: 10% borrower equity, 10% seller note, 80% SBA 7(a). 10-year amortization on goodwill, 25-year on real estate.

DUNS number

A unique nine-digit identifier assigned to a business by Dun & Bradstreet. Required for federal contracts; required for most business tradelines; the anchor of your business credit profile separate from your personal credit.

Free to obtain at dnb.com. Takes 30 days standard; expedite available for a fee.

EIN — Employer Identification Number

A nine-digit federal tax identifier issued by the IRS to a business entity. Required to open a business bank account, hire employees, file business taxes, and apply for most business credit. Free, takes 10 minutes online.

Apply at irs.gov. You receive the EIN immediately upon completing the form.

Florida SunBiz LLC

Florida's online business filing system at sunbiz.org. The fastest, cheapest path to legally form an LLC in Florida — $125 initial filing fee, $138.75 annual report due each May.

LLC takes effect immediately upon filing. Article of Organization gets filed online; you receive a digital certificate within hours.

Business credit profile

The set of credit reports and scores that exist on your business (under its EIN and DUNS), separate from your personal credit. Three main commercial bureaus: Dun & Bradstreet (PAYDEX score), Experian Business (Intelliscore), Equifax Business.

A clean business credit profile lets the business borrow on its own merit — vehicle leases, equipment loans, lines of credit — without your personal guarantee. Takes 6-12 months of disciplined tradeline activity to build.

Business tradeline

A credit account reported under a business EIN (not the owner's SSN) on the business's commercial credit report. Common starter tradelines: Uline (office supplies), Quill (office), Grainger (industrial), Summa Office Supplies. Pay net-30 terms on time; the vendor reports to D&B and Experian Business.

3-5 starter tradelines paid on time for 60 days establishes a baseline PAYDEX score. From there the profile graduates to fleet cards, store cards, and revolving lines.

LOI — Letter of Intent

A non-binding document signed early in a business acquisition stating preliminary deal terms — price, structure, due-diligence period, exclusivity window. Used to lock the seller into exclusivity for typically 30-60 days while diligence proceeds.

LOIs are not contracts. The actual purchase agreement is signed at close. But a well-structured LOI prevents the seller from continuing to shop the deal during the diligence period.

SDE — Seller's Discretionary Earnings

The metric most small businesses are valued on. Calculated as: Net Income + Owner Salary + Owner Benefits + Depreciation + Amortization + Interest + Non-recurring expenses + Adjustments.

Most small businesses sell for 2-3x SDE. A laundromat with $80,000 SDE typically sells for $160k-$240k. A higher-multiple business (HVAC service company with recurring contracts) might trade at 3-4x.

Seller financing

A business acquisition structure where the seller accepts a portion of the purchase price as payments over time rather than cash at close. Common structure: 10-30% of purchase price held as a seller note, paid back over 3-7 years at 6-9% interest.

Strong signal of seller confidence in the business — they're betting on it cashflowing enough to service their own note. Also bridges SBA 7(a) gaps where the lender wants more equity than the buyer has.

Lease arbitrage (STR)

A short-term-rental model where the operator leases a property long-term from a landlord, then re-rents it nightly on Airbnb / VRBO. Profit is the spread between the long-term rent paid to the landlord and the nightly revenue collected.

Lower capital entry than ownership ($5k-$25k for furniture and deposits vs. $50k+ for down payment). Higher risk because regulation tightening and platform-policy changes can wipe out the model overnight in a given market.

STR — Short-term rental

A residential property rented nightly or weekly via platforms like Airbnb, VRBO, or Booking.com. Distinguished from long-term rentals (12-month leases) and mid-term rentals (1-6 month furnished corporate stays).

STR underwriting is fundamentally different from long-term: revenue is seasonal, occupancy varies by market, ops cost is significant (cleaning, supplies, guest comms). AirDNA and PriceLabs are standard analyst tools.

Succession buyout

The acquisition of a business from a retiring owner who has no successor. Often seller-financed because the retiring owner needs ongoing income and is willing to bet on the business's continued cashflow.

A meaningful arbitrage right now: the Baby Boomer generation owns ~$10 trillion in small businesses with insufficient successors. Many businesses sell below market multiples simply because the seller wants someone to take over the operation.

Boring business

A term popularized by Codie Sanchez (Contrarian Thinking) for cashflowing, low-glamour service businesses with established demand and stable margins. Examples: laundromats, car washes, vending routes, mobile-home parks, ATM routes, self-storage, lawn services.

Attractive precisely because they're unsexy — less buyer competition, more reasonable multiples (2-3x SDE), and durable demand because the underlying service doesn't get disrupted easily.

CapEx vs. OpEx

CapEx (Capital Expenditure): spending on long-lived assets that get depreciated over years — equipment, vehicles, real estate improvements.

OpEx (Operating Expenditure): day-to-day operating costs that get expensed in the year incurred — rent, utilities, supplies, payroll.

Why it matters for acquisition: a business with $80k SDE but $30k of necessary annual CapEx is actually a $50k SDE business. Seller's broker won't volunteer this distinction.

Due diligence (DD)

The verification period between LOI signing and close where the buyer confirms what the seller represented. Standard scope: financial statements (3-5 years), tax returns, bank statements, customer concentration, vendor contracts, equipment condition, employee handbook, lease terms, regulatory compliance.

DD typically runs 30-60 days. Findings either confirm the LOI price, justify a price reduction, or surface dealbreakers that kill the deal.

Quality of Earnings (QoE)

A formal accounting analysis of a target business's financials, typically commissioned for deals above $500k. A third-party CPA firm normalizes the seller's books to true SDE, identifies one-time items, and flags accounting practices that don't conform to GAAP.

QoE costs $5,000-$25,000 depending on deal complexity. Worth it on larger acquisitions because findings often justify price renegotiation that pays for the QoE many times over.

SMB acquisition

The acquisition of a small or mid-sized business — typically defined as a business with under $5 million in revenue or under $1 million in SDE. Distinguishes from middle-market M&A (the $5M-$50M revenue band) and large-cap M&A.

The SMB acquisition market is where solo operators and small partnerships can actually compete — large private-equity rollups generally don't bother with deals under $1M in SDE.

Owner-financed deal

A deal structure where the buyer finances the purchase price (or a portion of it) directly from the seller, without involving a traditional lender. Most common in succession deals, FSBO real estate, and small-business acquisitions where the seller wants installment income.

Common terms: 10-30% down, 5-10% interest, 5-10 year amortization. Buyer benefits: no bank underwriting, faster close, often more flexible structure. Seller benefits: ongoing income, often a higher headline price.

Search fund

A formal acquisition structure where one or two principals raise capital from investors specifically to acquire a single small business, then operate it. Typical search fund: $400k-$600k raised to fund a 2-year search, then $5M-$15M raised to close the actual acquisition.

Higher-end alternative to the Owner Path for operators with MBA-tier credentials and access to institutional investor networks. Not the right structure for most W-2-to-owner transitions.

Operator model

A delivery model where the same person who scopes the work also executes it. Contrasted with the agency model where an account manager scopes, a project manager coordinates, and junior staff execute — with markup at every layer.

Operator-model engagements ship faster, cost less, and produce more consistent quality because there's no telephone-game distortion between the buyer and the producer.