Other Key Factors in Valuing a Small Business for Sale

Understanding the Elements That Drive Business Valuation As the final part in this series of valuing a small business for sale, it is important to recognize additional factors that significantly influence buyer demand and final valuation. 1. Business Longevity and Track Record Buyers tend to favor well-established businesses with a proven track record. A longer […]

Seller Discretionary Earnings and Business Sales Price

Understanding Seller Discretionary Earnings (SDE) in Business Valuation Seller Discretionary Earnings (SDE) play a critical role in determining the fair market value of a small business. As a fundamental financial metric, SDE provides valuable insights into a company’s financial health and attractiveness to potential buyers. Additionally, the predictability of cash flow significantly influences valuation. Business […]

How Are Small Businesses Valued for Sale?

Historical Cash Flow Analysis and Seller Discretionary Earnings (SDE) When assessing the value of a small business, analyzing historical cash flow is a fundamental approach. This method provides buyers with insight into the company’s annual revenue generation and often justifies a premium purchase price for businesses with a proven track record of success. However, many […]