Would You Buy This $2.5M Transportation Business?

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This week: 30 days into their hunt for an acquisition, a buyer stumbled into a potential $2.5M deal that taught them 3 timeless lessons.

But first…

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Now, onto today’s deal…

NUMBERS

One of our community members — 30 days into their acquisition journey — brought this deal to the table.

The buyer isn’t coming in cold. They spent more than two decades in federal service, managing eight- and nine-figure programs, and they’ve already started and run small ventures on the side. What they were looking for next was a business that could check a few key boxes:

This listing appeared to fit.

The business: a non-emergency medical transportation company founded in 2019. Vans, drivers, and dispatchers ferry patients to and from hospitals, dialysis centers, and clinics.

It checked the boxes:

Financially, the story looked solid at first glance:

Offer on the Table: $2.5M (cash + SBA loan). That is, until the broker later surprise-packaged a sister business and jacked the ask to $7M.

Employees: 12 (drivers + dispatcher + light admin)

Owner Involvement: Semi-absentee

SDE Trends: Steady YoY growth

On paper, it’s an intriguing, growing service play in a sticky industry. But the deeper the buyer went, the murkier the water got.

Let’s dig in…

KEY IDEAS

The buyer didn’t get far before the red flags started flying. What began as a straightforward $2.5M opportunity quickly surfaced questions about valuation, negotiation, and even the reliability of the numbers on the page.

The community’s deal coaches pulled out 3 key lessons that apply to nearly every deal.

The first hang-up came from valuation. At $2.5M on $587k SDE, the multiple worked out to 4.3x. The buyer flagged it as high, his accountant agreed, and industry data confirmed it. On paper, it looked like the end of the road.

But the coaches stopped him. The problem wasn’t just the multiple; it was thinking the multiple was the right place to start.

The community’s deal coaches reminded the buyer that while multiples aren’t irrelevant, they’re not where valuation begins.

Instead of deciding “too expensive” based on a comp, the advice was to work backward from cash flow and debt first. Plug in loan terms, adjust the deal mechanics until the DSCR clears 1.5, and let that number reveal your price.

As one coach added, “In particular, at a 4 or 5x, you’re likely negative cash flow… At a 2, you’d probably be in the realm where the cash flow would make sense.”

Lesson: the multiple isn’t meaningless, but don’t let multiples scare you off or lull you in. Cash flow is the anchor.

Just as the buyer was grappling with that high multiple, the broker dropped a bomb: the seller had a sister company, and the package price was now $7M.

It felt like the final straw. But again, the group reframed it. A high price isn’t the end; it’s the beginning of a negotiation strategy.

First, establish credibility and show you’re the right buyer, the deal coaches recommended. Then, let your due diligence and the bank’s lending limits help you pull the price back to reality.

And if the only hurdle is size? Don’t rule it out.

That’s when one coach reminded him of the advantage right in front of him:

A high sticker isn’t a closed door. It’s an opening to build trust, reset expectations, or break through to a bigger deal.

Then there was the “FY25 projected” column. At first glance, it was alarming and unrealistic.

The buyer’s instinct was to dig in: was this sloppiness, or a sign of something worse? But the feedback was clear: don’t waste time early on underwriting fantasy.

Projections can be a sales tactic, telling you the story a seller wants you to see. But they aren’t facts, and they don’t truly belong in your initial pricing models.

INDUSTRY

Non-emergency medical transport is riding some of America’s biggest demographic waves.

There are a little over 60 million people aged 65+ in America today. By 2050, the U.S. projects there will be around 82 million, many of whom will need help getting to appointments, dialysis, or treatments.

Even with the advent of self-driving vehicles, there will need to be specialized services that help these people reach their care.

Millions of rides covered: A report for the Centers for Medicare & Medicaid Services covering 2018-2021 found that millions of Medicaid beneficiaries use non-emergency medical transport annually, with federal spending in the billions.

Missed visits are estimated to cost the healthcare system billions annually, which is why payers and providers want dependable operators. Add in $104B of healthcare PE deal activity in 2024, and it is clear capital is circling.

Where growth lies:

THE BOTTOM LINE

The buyer now has options. He can lean back into this deal, armed with a better playbook, or he can set it aside and apply those same lessons to the next deal that crosses his desk.

Either way, his progress is clear. As one coach put it:

The path from first review to first close is rarely straight, but reps like these are not wasted. They just compound into something greater.

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