Guides for buyers · 6 min read

How to evaluate a business listing

By Colton Doan, founder of Sellvara · Updated October 30, 2026

A business-for-sale listing is a summary written by the seller, or their broker, to get your attention. It's a starting point, not the full story. Knowing how to read one, and what to ask next, helps you spot good opportunities quickly and avoid spending months on the wrong one.

Start with the basics

Before you go further, check whether the business fits what you're looking for:

• Industry: do you understand it, or can you learn it quickly?
• Location: is it somewhere you can live or work?
• Size: is the asking price within what you can realistically finance?
• Your role: does it need a full-time owner-operator, or is there a manager in place?

If it doesn't fit, move on. It's tempting to look at everything, but focus saves time.

Understand the numbers

Most listings show some combination of revenue, earnings and asking price. The key figures:

• Revenue: total sales. Useful for size, but it says little about profit.
• SDE (seller's discretionary earnings): what the business earns for one full-time owner, after adding back the owner's pay and personal or one-time expenses. The most useful figure for owner-operated businesses.
• EBITDA: earnings before interest, taxes, depreciation and amortization, used for larger businesses with managers.
• Asking price: what the seller hopes to get.

Divide the asking price by SDE (or EBITDA) to get the multiple the seller is asking for, and compare it with what's typical for the industry. Our guide to what a business is worth explains typical ranges and what pushes multiples up or down.

If a listing shows only revenue, or only a range, that's normal for a blind listing. You'll get the details after signing an NDA.

Read between the lines

Listings highlight strengths. Notice what's missing too:

• "Owner works 60 hours a week" or "great opportunity for a hands-on owner": the business may depend heavily on the owner.
• "Huge growth potential": often means the growth hasn't happened yet. Pay for what the business does now, not what it could do.
• No mention of the lease: ask how long is left.
• Revenue shown but not earnings: ask why.
• Very round or unusually high add-backs: ask for the details.

What's included in the price

Clarify exactly what you'd be buying:

• Equipment, vehicles and furniture.
• Inventory, which is often added to the price at its value on closing day.
• The business name, website, phone numbers and customer list.
• Real estate, if the seller owns the property, or whether you'd be leasing it.
• Cash and receivables, which usually stay with the seller.
• Whether it's a sale of assets or shares (see asset sale vs share sale).

Questions to ask in your first conversation

• Why are you selling?
• How many hours do you work, and what do you personally do each week?
• Who are your largest customers, and what share of sales do they represent?
• How have sales and profit changed over the past three years, and this year so far?
• How long is left on the lease, and will the landlord transfer it?
• Who are your key employees, and are they likely to stay?
• What would you do differently if you were staying?
• How long will you stay to help after the sale?
• Would you consider vendor financing for part of the price?

Listen to the answers, and to how they're given. Clear, consistent answers are a good sign.

When to go further

If the business fits and the first answers make sense, the next step is usually to review the detailed financial statements and tax returns with your accountant, then make an offer through a letter of intent. Keep an eye out for the warning signs in our guide to red flags when buying a business.

Common questions

What should I look for in a business-for-sale listing?

The industry and location, revenue and earnings (SDE or EBITDA), the asking price and multiple, what's included in the price, the lease, and how much the business depends on the owner.

How do I know if an asking price is fair?

Divide the asking price by SDE or EBITDA to get the multiple, and compare it with typical ranges for the industry. Then confirm the earnings in due diligence.

What questions should I ask a business seller?

Why they're selling, how many hours they work, who the largest customers are, how results have changed, the lease terms, which staff are key, and how long they'll stay after the sale.

How listings work on Sellvara

Sellvara listings are blind: each shows the industry, region and a revenue range, without naming the business. To see the details, you request access, sign an NDA and share some background about yourself, and the seller decides whether to approve you. Browse the marketplace, or read how to buy a business in Canada for the full process.

This guide is general information, not legal, tax or financial advice. Every sale is different: talk to your own accountant and lawyer before you decide.