In year one, build what a lender, investor or auditor will ask for on deal two: monthly accrual-basis financials closed on a fixed date, books clean enough to be audited, a management team that runs the business without you, and a simple governance structure with a holding company and outside advisers. As of October 2026, SBA lenders treat an existing business buying another as a Business Expansion, with a 1.15x debt coverage test instead of 1.25x and an equity injection the lender may reduce, but lenders typically look for two full fiscal years under your ownership, measured on historical results, not projections. Year one's records are the evidence that makes deal two financeable.
Because the next lender will underwrite your history, not your plan. As of October 2026, under SBA SOP 50 10 8.1:
So the clock for deal two starts on closing day for deal one. Every month of clean, on-time financials is part of the file.
If passive minority investors' equity counted toward your SBA injection, they generally receive only tax distributions until the SBA loan is repaid. Regular reporting is how you keep their confidence while they wait.
You may never need an audit. But books an auditor can work with are also books a lender, an investor and a future buyer can trust quickly.
If a public listing is ever a real possibility, the bar rises. As of its September 2026 rules, OTCQB requires PCAOB-audited annual financials and current SEC reporting. My view is that going public is realistic only for holding companies with real earnings, or a clear path to them, and books an auditor can work with. Most acquirers should not go public: it adds cost and dilution, and in one academic study of newly public firms, stock-paid acquisitions underperformed cash deals by 20 to 30 percentage points over 3 to 5 years. See whether a holding company should go public. Year one is still the cheapest time to keep the option open.
These map to the four levers this site is built around: Capital, Talent, Opportunities and Acquisitions. In year one, the work is Capital and Talent. Raise or line up capital before you find deal two. My view is that raising after a letter of intent puts you under time pressure you don't need.
If you want this as a written plan, the Holding Company Playbook is that: $10,000 fixed, about 30 days, four one-on-one sessions, and a written playbook covering the four levers, valuation, a direct answer on going public and a 90-day plan. Details are on the Playbook page.
Illustrative figures, using the SBA maximum variable rate of 10% for loans over $350,000 as of September 2026 (prime of 7% plus 3%), over 10 years. Check current prime.
The longer view: GF Data's 2024 medians were 4.5x EBITDA for $1M to $10M deals and 6.5x for $10M to $100M. This site's illustration is a business earning $1M a year bought at 4x, or $4M, which supports $10M of value inside a platform valued at 10x. Real multiples vary. Overpaying or failing to integrate destroys that value.
Where these numbers come from: SBA coverage, injection, Business Expansion, QoE, valuation and guarantor rules are from SOP 50 10 8.1, summarized by Beancount's SOP 50 10 8.1 guide and Cantrell Firm. Loan caps are from the SBA 7(a) program page; the rate from NerdWallet. OTCQB requirements are from the OTCQB Rules v6.1. Stock-deal performance is from a study summarized on the CLS Blue Sky Blog. Multiples are GF Data via Carry and Conquer. SOP 50 10 8.1 applies to loans that receive an SBA loan number on or after October 1, 2026 (SBA Information Notice 5000-880695).
Yes, but probably not as a Business Expansion, since lenders typically look for two full fiscal years. You would face the 1.25x Initial Acquisition test and a 10% injection that cannot be reduced, or use non-SBA capital.
The SBA rules summarized here do not require an audit. Your lender sets its own reporting requirements. Investors and any future listing are what usually make an audit necessary.
Usually not full-time. Outsourced accounting with a strong controller and an outside CPA is often enough at one business. A public holding company needs much more. See the finance team a public holding company needs.
With a year of clean results, the next question is how to pay for deal two: I already own a business. How do I finance buying a second one? The buyers who end up with the most valuable companies decide what the business goes into before they buy it, and build year one around that decision.
Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.
Start with the playbook. The first conversation is free.
Meraki Dealmakers is a service of Meraki Partners, LLC.
Meraki Partners, LLC is an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm, and does not solicit investors or receive compensation based on capital raised.
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