The Silver Tsunami: Issue No. 007

Welcome to The Silver Tsunami. This week, a viral post pitching nine "boring" businesses to W-2 workers turned into one of the most honest public conversations about buying a small business in years. We break down the criticism, the math under every listing's cash flow number, and the clause that turns "do your diligence" into recourse. Then there is plenty more deal lore below. Let's get into it.

If this week's debate taught us anything, it is that the ETA community works best when people compare notes in person instead of in quote posts. SMBash is the national gathering of buyers, searchers, operators, lenders, and capital partners, and the 2027 edition is set for April 21-22 in Irving, Texas. Two days to learn, connect, and do business.

Sponsorships are open. If your brand serves searchers, operators, or capital partners, this is the room. Details at smbash.com/sponsors.

Full disclosure: Kevin and Sam Rosati are co-owners of SMBash.

On Sunday, Bobby Graham, president of the business-acquisition platform BizScout, posted: if you work a W-2 job and don't have "a boring business that pays you $5k-$10k a month on top of your salary," here were nine for sale. The thread listed each one with its cash flow, asking price, and multiple. A Duval County, Florida landscaping company showed $628,000 of cash flow at a $695,000 asking price. A Queens collision shop showed $809,000 at $1 million. The list also included a Houston day care, a Palm Beach concierge medicine practice, and a Rhode Island bakery. As of this writing, the post had been viewed about a million times.

Then the pile-on became a genre. A Community Note appeared beneath the post, explaining that the cash flow figures are Seller's Discretionary Earnings, which include pay for the owner who runs the business, and that these are not passive side income. But the note was the polite part. Within a day, some of the most experienced voices in small business acquisition were writing short fiction about what owning these businesses on top of a W-2 actually looks like.

The day-in-the-life satires. Michael Fiore imagined a big presentation at your W-2 job interrupted by a call from Javier, the foreman of your mowing crew. Kaustubh Deo of Guesswork Investing wrote a buyer standing in a 7 a.m. boarding line for a corporate trip while the work truck won't start, a crew member wants a raise to show up, and a text from home says the school wants a meeting. Jon Matzner set his at a Houston daycare: two teachers call out, the staffing ratio breaks, the only available sub wants far more per hour than the old owner paid, and the owner smiles into a quarterly review anyway. Ben Bortner of Slackwater Capital put his ten weeks after closing on a pool company, with an angry commercial customer, a chemical incident near the shop, and a frantic search about personal liability. It ends: "It's 9:20. Passive income." A note from the lawyers on that search: an LLC can limit some business liabilities, but it does not cover a personal guarantee you signed for the acquisition loan, and owners can still be personally responsible for their own conduct.

The one that was not fiction. Shawn Gorham shared a first-person account of a wage dispute at his business. According to his post, a former employee claimed work began at 5:30 a.m., despite time cards showing 6 a.m. Gorham says he opened early and provided coffee and donuts. He reports that the dispute resulted in a $350,000 settlement covering back pay going back five years. We have not reviewed the case or settlement and cannot independently confirm the legal basis for that outcome. The general lesson is still worth knowing before you buy anything with hourly workers: under federal law, employers generally must pay nonexempt employees for work they know or have reason to know is being performed, even before a scheduled shift. Simply arriving early for coffee does not automatically count as work, and a written start time does not eliminate the obligation to pay for actual work. The federal wage law generally looks back two years, or three for willful violations. State-law claims and settlement terms can differ.

The blunt versions. Will Schryver needed two lines: "You either take the W2 salary or the boring business distributions, not both." Separately, in a September post that predated Bobby's thread, Jed Morris described the personal toll of a failed business. He wrote that the failure left his family in "financial ruin," while reflecting on what he learned and his determination to move forward. We wrote about his post in Issue No. 004.

The satire aimed at the whole industry. Matzner followed up with a longer piece, written as a first-person story: a buyer learns the playbook from viral videos, borrows to buy, keeps up a highlight reel online while the business strains his family, and finally calls his brother to say he is not okay. It ends on a joke about influencer culture. The middle is the part worth sitting with.

What changed. For a few years, the pitch for buying a small business spread fast: boomer owners retiring, SBA leverage, and "boring" businesses that throw off cash. We have been part of that conversation. Eric has spent years making the case on X, and the wave of retiring business owners is where this newsletter gets its name. The pitch was never wrong about the opportunity. It was often wrong about the job. What this week showed is that the ETA community now corrects that in public, and quickly. The question has moved from "can you buy a business?" to "who runs it, what does that cost, what are you personally on the hook for, and what is left for you after all of it?"

A note on fairness before the numbers. We have not independently audited the financial information behind any of the nine listings, so our analysis addresses what seller-reported cash flow means, not whether those particular figures are accurate.

What Bobby says. The next day, Bobby responded. He wrote that the businesses "are not passive" and that he never said they were, that he has owned businesses on top of a W-2 "for 11+ years" by eventually bringing in an operator and stepping back, and that "the listings are real and the brokers stand behind them." Then he added the most useful sentence in the whole saga: "Numbers are seller reported, so do your diligence."

What "cash flow" means on a listing. On many small business marketplaces, cash flow refers to Seller's Discretionary Earnings, or SDE. It generally starts with reported earnings and adds back the owner's compensation and certain other expenses. BizBuySell, for example, builds its valuation data on SDE as reported by business owners and brokers. SDE is a useful starting point for valuation. It is not the same as the cash a buyer can take home while someone else runs the business.

The math buyers still need to run. Here is a simplified illustration, not one of the nine listings and not a lender quote. Suppose a business reports $200,000 in annual SDE and sells for $500,000. Assume a hypothetical $450,000 loan amortized over ten years at a fixed 10.5% interest rate. Annual debt service would be about $73,000. If replacing the owner costs $90,000 a year, about $37,000 remains, roughly $3,100 a month, before taxes, capital expenditures, working capital, transaction costs, or surprises. Whether a lender would finance that deal on those terms is a separate question. In this hypothetical, what is left for the new owner falls well short of $5,000 to $10,000 a month.

The prices. BizBuySell's five-year data for reported completed sales from Q3 2021 through Q2 2026 shows an average earnings multiple of 2.58x across industries, including 2.49x for landscaping, 2.85x for auto repair, and 3.28x for day care. Some of the asking-price-to-cash-flow ratios in Bobby's thread are lower. But asking prices are not closing prices, and we have not independently verified the underlying earnings. A low ratio is a reason to ask more questions about owner involvement, leases, operating costs, and the rest. It does not establish that anything is wrong with a business.

What the market is actually paying for. In its Q3 2026 report, BizBuySell reported 2,132 completed small business sales at a median price of $350,000, and the company's president, Bob House, said buyers are gravitating toward businesses with "limited owner dependence." That is the whole debate in three words. Businesses with less owner dependence tend to command a premium, though pricing depends on many other factors.

Where we land. Bobby is right that people buy businesses while keeping a job. The critics are right that the job does not stop being a job because it is boring. Both things fit inside one sentence the industry is finally saying out loud: the number to underwrite is what is left after you pay someone to do your job and pay the bank, and the price should reflect who actually does the work. That is a healthier conversation than the one ETA was having two years ago, and we would rather be part of this one. For the record, Eric's contribution was a quote post: "I bought 7 passive and cash flowing businesses today while you keyboard warriors were sitting around being haters." That one was satire too.

One provision a week, from people who draft them for a living.

This week: the financial statements representation, and the add-backs it usually misses.

A listing's cash flow number is marketing. The purchase agreement is where numbers become promises, and many buyers are surprised by which numbers actually make it in. A typical asset purchase agreement includes something like this (illustrative language, not from any of the nine listings):

"The Financial Statements have been prepared from the books and records of the Business and fairly present, in all material respects, the financial condition and results of operations of the Business as of their respective dates and for the periods indicated."

Notice what is missing: an express representation about SDE or the adjustments used to calculate it. This illustrative clause covers the financial statements, subject to its materiality qualifier. It does not separately confirm each add-back. In an ordinary acquisition, those are the items worth testing one by one: owner compensation, vehicle and personal expenses run through the business, family members on payroll, and expenses described as one-time. These are general diligence examples, not findings about any of the nine listings.

What to ask for. Start with a schedule that reconciles reported SDE to the historical financial statements, with documents and an explanation for each adjustment. Negotiate a specific representation about that schedule's accuracy and completeness. Separately budget for management, debt service, and ongoing capital needs, because some add-backs, like the owner's pay, still have to be partly replaced. Scale the financial review to the deal, and negotiate remedies that fit it, which may include indemnification, an escrow, or a right to set off against a seller note. Those protections exist only to the extent the agreement actually provides them, subject to its limits.

Why it matters. "Do your diligence" is good advice. The contract is where diligence turns into recourse. If the seller-reported numbers are wrong and nothing in the agreement covers them, you may have bought the gap.

T-Mobile bought Sprint to get bigger. Getting that deal approved came with conditions, including spectrum the combined company would eventually have to give up. In August, T-Mobile completed the sale of its 800 MHz spectrum portfolio, spectrum it had to divest under the Justice Department's merger conditions, to Grain Management for $2.9 billion in cash plus Grain's 600 MHz licenses. Two months later, on October 8, Grain agreed to sell the entire portfolio to SpaceX to power Starlink Mobile. The deal still needs FCC approval. Reports put the price around $8 billion, though the companies did not confirm it, and shares of AT&T, Verizon, and T-Mobile fell on the news. As Eric put it, the merger requirements may help Elon Musk become T-Mobile's next competitor.

Why it matters to you. Once you sell an asset, you usually lose control over where it goes next, unless the contract says otherwise. In small business deals this comes up more than people expect: a seller carves out a location, a product line, a customer list, or a piece of equipment, and it ends up with a competitor. If that matters to you, negotiate it up front. Tools include use restrictions, rights of first refusal, transfer restrictions, and a noncompete tied to the sale, which is generally easier to enforce in a business sale than in employment, subject to the limits of state law. The same loss of control after closing is why earnouts disappoint so often, as we covered with PepsiCo and Poppi in Issue No. 006.

The lore. Regulators often require divestitures as the price of approving large mergers. Those conditions are written to protect competition, but nobody can predict who ends up holding the divested assets years later. The divestiture obligation dates to the 2020 Sprint merger. Grain acquired the spectrum in August 2026 and agreed to resell it to SpaceX less than two months later, subject to FCC approval.

Same question to Grok, ChatGPT, and Claude: Can someone with a full-time W-2 job realistically buy and own a small business on the side? One word, then three sentences. Answers are verbatim.

GROK: YES. "Many people, including self-funded searchers and franchise buyers, acquire businesses while keeping a full-time W-2 by searching nights and weekends and financing with SBA loans plus personal equity. After close, semi-absentee ownership is realistic when the business can support a competent manager and generates enough cash flow to cover management costs plus debt service, typically on larger or systematized deals rather than tiny owner-dependent ones. The timeline is slower and the workload higher than a full-time search, and employment contracts or lender rules can constrain options, but documented examples show it is done."

CHATGPT: YES. "It's absolutely realistic, but the key is buying a business that can operate without you being there every day. That generally means having reliable management, predictable cash flow, and enough profit to pay someone to run the day-to-day operations. The biggest mistake is buying a business that looks like an investment on paper but turns into a second full-time job in practice."

CLAUDE: YES. "People do it every year, but only when the business can pay a real manager, cover the debt, and still have something left for the owner. Seller's Discretionary Earnings is measured before any of those costs, so a listing's cash flow number is usually not what a W-2 owner takes home. Underwrite the cash that is left after you have replaced yourself, not the number on the listing."

Many of the quote posts were skeptical. All three models answered yes, but with conditions, and all three attached the same one. Someone has to be paid to do the owner's job, and that pay has to come out of the cash flow before you count it as yours. When we asked them in Issue No. 004 whether buying a business beats starting one, all three said yes then, too.

Kevin called it "probably the greatest negotiation case study of the year," and it was viewed more than 400,000 times. Jerry Jones bought the Dallas Cowboys in 1989 for roughly $150 million. In September, Forbes valued the team at $17 billion, the most valuable NFL franchise for the 20th straight year, and estimated about $1.28 billion in revenue and $677 million in operating income last season. That is more than $77,000 of operating income an hour, every hour of the year.

Meanwhile, on the sidelines. In 2018, a former Dallas Cowboys cheerleader sued, alleging she was paid about $8 an hour. The team settled in 2019, and game-day pay doubled from $200 to $400, according to the Associated Press. A cheerleader featured in Netflix's "America's Sweethearts" said the squad got a 400% raise for the 2025 season, with some veterans expected to top $75 an hour. Then last Friday, the Cowboys voluntarily recognized the Dallas Cowboys Cheerleaders Association as the squad's bargaining representative. The Dallas squad is among the few NFL cheerleading squads to unionize. The Buffalo Jills were the first, organizing in 1995 before that squad later disbanded. Collective bargaining starts now.

Why it matters to you. Under federal labor law, an employer can voluntarily recognize a union that shows majority support instead of going through an NLRB election. For a buyer, union status is a diligence item, not a footnote. In an equity acquisition, the target generally remains bound by its existing collective bargaining agreement. In an asset acquisition, the buyer generally does not automatically assume the seller's agreement. But if the buyer continues substantially the same operations and a majority of employees in the new bargaining unit come from the unionized predecessor workforce, federal labor law may require the buyer to recognize and bargain with the union. Different rules can apply when a buyer assumes the agreement or makes it perfectly clear it will keep the existing workforce. Ask about organizing activity, pending charges, and labor contracts early, and get representations about them in the purchase agreement.

The lesson in Kevin's post. The franchise's value and the people on the field are two sides of the same negotiation. Labor costs that were cheap for years can reset quickly, and when they do, they reset what the business is worth.

That is how much more wealth the typical household headed by someone 75 or older has than the typical household headed by someone under 35, according to the Federal Reserve's newest Survey of Consumer Finances. From 2022 to 2025, median net worth for households under 35 fell 23% to $33,000. For households 75 and older, it rose 37% to $504,900, the highest median for any age group in the survey's history. By one analysis of the Fed's tables, the ratio between the two groups jumped from 8.6x in 2022 to 15.3x in 2025.

Why it matters to you. This is the Silver Tsunami in one number. A large share of the country's wealth sits with the oldest owners, including in homes, retirement accounts, and businesses, while the next generation of buyers has less cash to put down and higher borrowing costs. That gap is why seller financing, earnouts, and minority rollovers keep showing up in deals: the money to buy the business often has to come partly from the person selling it. Eric's take: one generation already owns most of what has appreciated for decades, and the next is trying to catch up at today's borrowing costs. It is also why we argued back in Issue No. 002 that the Silver Tsunami is as much a business-mortality story as a wealth-transfer story.

Two of our most-replied-to posts this week were about the same thing: what a company actually promised you. We said we would dig into the fine print. Here it is.

StubHub and the World Series. Some Milwaukee Brewers fans learned on the day of Game 1 that the World Series tickets they bought on StubHub were not coming. One fan told FOX6 he had bought three seats for himself, his wife, and his 11-year-old son, then got an email at 1 a.m. on game day telling him to find replacements. The only seats left were not together, and he paid $4,600 more for them. StubHub refunded his original tickets. In a statement, StubHub said sellers could not complete a limited number of orders and that it was securing replacements where available, with full refunds as a backstop. Similar complaints surfaced during this summer's World Cup. Purchasers filed a proposed class action against StubHub in Manhattan federal court alleging ticket cancellations and failures to deliver, and the Texas attorney general opened an investigation. The allegations have not been adjudicated. As Eric put it: the guarantee gets you a refund or comparable seats, not a promise you actually get through the gate.

What that means. A refund of what you paid does not cover the extra cost of buying replacements at game-day prices, or the trip you planned around the game. Whether anyone owes you for those other losses depends on the terms you accepted and the law that applies, and that is exactly what the World Cup lawsuit is fighting about.

The Brewers' own fine print. In 2015, the team sold "Timeless Tickets" for $1,000, redeemable for any future game, including a World Series. The promotion said the tickets could be redeemed for "the best available seat locations, subject to ticket availability at the time of redemption." This month, several hundred holders tried to use them and were offered upper-deck or standing-room options. The team's president of business operations acknowledged it "did not live up to the spirit of the program," and the Brewers let affected holders keep their World Series seats and their Timeless Ticket for a future game. Four words, "subject to ticket availability," did a lot of work.

Airbnb changed the rules on hosts. On October 20, Airbnb announced that for reservations booked on or after November 20, hosts generally cannot require guests to wash dishes, strip beds, start laundry, or haul trash off the property. Hosts can still make reasonable requests, like gathering used towels or turning off appliances, and hosts who keep breaking the rule face warnings, lower search placement, or alerts on their listings. Guests cheered. Some hosts threatened to leave the platform, pull kitchen access, or raise cleaning fees. Eric's take on charging a cleaning fee and then asking guests to clean was seen more than 240,000 times.

What it means for hosts running a real business. Every host agreed to terms that let Airbnb revise its terms and policies, generally with advance notice for material changes, and a host who disagrees mainly has one option: stop using the platform. Airbnb can also suspend accounts or remove listings in some circumstances. That is platform risk, and it belongs in the price. If you are buying a short-term rental business, look at how much revenue depends on one platform, the listing's review and compliance history, whether there is a direct booking channel, and whether local short-term rental permits transfer to a new owner. Revenue that someone else can change with a policy email deserves a harder look than revenue you control.

Why it matters to you. These stories show different kinds of contractual risk: a ticket guarantee with limited remedies, a redemption right subject to availability, and a platform that can change its policies. Purchase agreements require the same attention to detail. Indemnification provides a contractual remedy, but caps, baskets, survival periods, exclusions, and the available sources of recovery affect what a buyer can actually collect. Read the remedy, not just the promise.

One of the businesses in Bobby's thread was described as a Houston child-care operation in a licensed 5,500-square-foot facility. Texas adds a critical diligence issue. Under Texas Human Resources Code Section 42.048, a child-care license is not transferable, and "a change in ownership automatically revokes a license." A buyer should coordinate the new permit application and the closing timeline with Texas regulators rather than assume the existing license follows the deal.

The lore. This is not unique to child care, although the rules differ by industry and state. The Palm Beach concierge medicine listing raises a different set of questions about licensed professionals, permitted ownership structures, and who may provide medical services. We have not reviewed that practice's specific licensing or ownership arrangements.

Why it matters to you. Before buying a regulated business, confirm whether the transaction triggers a new license or approval, who must hold it, which qualified people must stay involved, and how long the process takes. Address those requirements in the purchase agreement and coordinate the transition with the regulator before closing. Do not assume the business can keep operating under the seller's existing permit. Third-party approvals can gate a closing in ordinary businesses too, like the landlord consent we covered in Issue No. 002.

In the late 1990s, a painter and decorator in Woking, England, noticed his son getting into Pokémon cards at school. So he started buying complete sets, some from a seller in Malaysia on eBay. Between 1999 and 2009 he collected 42 of them. When his son lost interest, the collection went into the attic, where it sat for about 15 years.

Then he read in his local newspaper that a single Pokémon card had sold for more than £6,000. He took his collection to Ewbank's, an auction house in Surrey, which estimated it at around £250,000. On October 21, bidders from around the world competed for 41 of his 42 sets, producing £1.56 million in sales, about $2.09 million, which the auction house called the most valuable trading card auction in UK history. He kept the remaining set. One set he had bought for about £300 went for roughly £75,000. The retiree, who asked not to be named, told the BBC that for him the treasure-in-the-attic cliché was "literally true."

Why it matters to you. Three things drove that price, and they apply to selling a business too. Completeness: whole, untouched sets were worth far more than loose cards. Condition: they sat untouched in an attic for 15 years. And process: the final price came in at more than six times the pre-sale estimate because the auction put serious buyers from around the world in the same room. One interested buyer gives you a price. Competition gives you a market. Eric's post about the story was seen nearly a million times this week. If you are thinking about selling, running a real process is a big part of what we do at SMB Law Group.

A $1.2 billion dog company. Warhound, conceived by Colossal Biosciences' Ben Lamm and Anduril co-founder Palmer Luckey, came out of stealth with a $200 million seed round from investors including Sequoia, 8VC, and In-Q-Tel, at a reported $1.2 billion valuation. The plan is to bank, clone, and gene-edit elite working dogs for the military, law enforcement, and first responders. The pitch is about supply: the founders say the military has to buy and train about 200 dogs to field 100. The dogs themselves do not exist yet.

SolarCity, the sequel? On SpaceX's earnings call on October 20, Elon Musk said SpaceX and Tesla have each formed special committees of independent directors to study a merger, at shareholders' request, and that Tesla would need the approval of a majority of all outstanding shares. The last time Tesla bought a Musk-affiliated company was SolarCity in 2016, which led to years of shareholder litigation in Delaware before the courts upheld the deal. This time Tesla is a Texas corporation, so a different state's corporate law would govern. For a small business owner, the principle scales down: when the same person sits on both sides of a deal, an independent decision-maker and a fair process help manage the conflict.

New this week: Independent Sponsorship 101, Part 2. Kevin and Sam Rosati walk first-time buyers through the independent sponsor model: raising equity deal by deal, how sponsors get paid, why it is a harder first deal than most people expect, and why it still requires hands-on oversight even when someone else manages daily operations.

Follow Main Street Deals on Apple Podcasts, or search "Main Street Deals" wherever you listen. Missed an issue? Every one is in the archive.

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See you next week.

Eric and Kevin