In April 2016, Small Business Trends wrote an article about a report from BizBuysell.com describing their analysis of small business purchases. The BizBuySell Insight Report is a nationally-recognized economic indicator that tracks the health of the U.S. small business economy. It focuses on sales and listing prices of owner-operated small businesses in over 70 major markets across the United States with less than $2 million in sales.
What is most disturbing about this report is the fact that the average sales price as a multiple of cashflow is only 2.6 times trailing 12 month net revenue. Data from the report saw 26,000 private business sales in 2015, the average buying price was 2.6 times net profit. That averaged out at about 260 thousand dollars, which is a really depressing number.
If they value your business at 2.6 times last year’s profits, they are making the bet that your business will perform as well as it has last year and that in 2.6 years time they will have their money back through dividends and will still end up owning a cash generating asset. You of course will tell them that next year will be your best year ever, they will assume that it will take longer than that and hopefully you find a happy middle ground. Once you understand what investors and buyers are looking for, the obvious thing to focus on is to increase profits so that you can get a better price for your business.
Here through Unity Group we are putting together groups of companies to help even more business owners in multiple sectors ranging from HVAC and Construction to Finance and Fashion.
Just before Christmas, Callam Laing completed a book called "Agglomerate - Idea to IPO in 12 months" which describes in great detail how the Agglomeration process will provide small business owners, like yourself, with access to the capital markets to ensure liquidity, growth and the potential for real wealth creation from the building of your business. this book is available on Amazon here: http://callumlaing.us8.list-manage2.com/track/click?u=f095a76184371144a52df0df4&id=27cbecfa85&e=3aebc6fa1f
I am making a free copy available to you you with one request. If you find the information useful to you and your business, you will agree to write a review of the book on Amazon.
To get your FREE copy, simply drop us a note with the phrase Book me and I`ll send you a copy in return for an honest review on our Amazon page.
To read the full Bizz Buy Sell story, please visit, http://www.bizbuysell.com/news/media_insight.html