How to spot a great deal in under 5 minutes

The quick screening framework that saves you hours of wasted time

Author

Ben Kelly
December 11, 2025

When you’re looking at 20-30 businesses to make 2-3 solid offers, you might not have the time to spend hours analyzing every single one.

You need a quick screening process to separate potential winners from obvious passes.

Today, I’ll show you my framework for evaluating deals in under 5 minutes.

The Golden Ratio test (30 seconds)

Look for profit margins between 15% and 35%.

If they’re below 15%, you’re at risk if a major change happens like losing a big customer.

Now, you might think a 35% profit margin sounds great. So why do I recommend avoiding anything above that?

Usually, that means the owner is doing most of the work themselves, which means you’re buying yourself a job.

This one metric eliminates most bad deals almost immediately.

The Three Pillars check (2 minutes)

Every business I buy must have:

Recession resistance: People need this service regardless of the economy (HVAC, plumbing, accounting, waste management)

Recurring revenue: Customers pay at least twice per year, ideally monthly or quarterly

Barrier to entry: Hard for competitors to replicate (requires licenses, capital, or established relationships)

If a business fails any of these three tests, it’s probably best to move on.

The valuation reality check (1 minute)

Small businesses typically sell for 2-4x cash flow.

Owner-dependent businesses (where the owner works in it daily) gets you a 2x multiple…

Whereas management-run businesses (where the owner is hands-off) can sell for a 4x multiple.

If the asking price is over 4x cash flow, the owner is probably overvaluing their business or wasting your time.

Quick red flags (1 minute)

Watch out if you see:

  • Declining revenue over the last 3 years

  • Any single customer represents over 10% of revenue

  • Business is under 5 years old

  • Personal expenses mixed with business expenses

  • Owner won’t provide complete financials

Any one of these should make you pause, and if there are multiple red flags, walk away.

The 5-minute decision

After this quick screen, you should know:

  • Pass completely (most deals fall here)

  • Pass for now, but circle back later

  • Worth a deeper look (maybe 1 in 10 deals)

Only the “worth a deeper look” businesses should get the full due diligence treatment.

This will save you hundreds of hours analyzing businesses that never had a chance.

Speed matters

The faster you can screen deals, the more you can evaluate, and the more you evaluate, the better your odds of finding a winner.

Use this framework to build your deal flow muscle and find great opportunities faster.

Need more deals to screen?

I share business opportunities with subscribers when I come across ones worth evaluating.

To get those emails, fill out this short form:

Or if you’re looking to sell your business:

Onward,

— Ben Kelly