Further to my post of April 28, lets explore the next of the elements in gaining a more favourable “Sellability Score” i.e. a more saleable asset. That is, “size matters; the larger company the better”.
In other words, allegedly, generating $3mil or more in revenue gets better multiples. Not sure that statement is completely true.
Certainly generating more revenue is good. However it’s the quality of the revenue ie how much does the business keep (profit) that is the key.
It’s all about how profitable the business is that leads the analysis from a sale perspective. Clearly, the more revenue a business generates, the more likely the profit figure will look healthy. But it’s not necessarily true. There’s a number of businesses we see as Business Brokers that are making impressive enough revenues but profit is elusive. Therefore implying that the business may not be as valuable as the vendor hoped and/or planned for.
Making for even more difficult discussions from our point of view by being the bearers of not-so-wanted news!
- the latest worldwide trends from the Sellability Score Tracker Q1 2014
- TEMpting; How Business Buyers and Sellers have been tempted this week…
- “less ongoing customisation is required i.e. there is a standard formula used for all clients”
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