Grrrrrr. Another great example of what drives us crazy.
Wealth Pilgrim’s blog post What Is My Business Worth? 3 Easy Steps to Find Out.
Well written, a great and straightforward overview of how to come up with your seller’s discretionary earnings . . . and then it goes off the rails:
If the free cash flow is rising, you can easily ask for 10 times last year’s net returns. So, in the example above, you should be able to ask $900,000 for a business that earned $90,000 net income if that income is increasing. If the net income is declining, you’ll be lucky to get five times last year’s return.
Did you get that? Ask for “10 times last years net returns”. “You’ll be lucky to get five.” Sigh.
The average multiple in 2017 for small businesses was around 2.4. (Source: BizBuySell)
Yet again, dangerous information creates confusion and harmful assumptions for small business owners.
The article is worth a read if for no other reason than to raise your awareness of how important it is for the the reader to beware.
Read the article here: https://wealthpilgrim.com/what-is-my-small-business-worth/