Knowledgebase
What Drives Business Value?
This article explores the top elements that drive business value, including cash flow, consistency & predictability, customer concentration, owner dependence, industry & market conditions, and systems & transferability.
How Do Revenue and Profit Stability Affect Business Value?
Revenue and profit stability describe how consistent and predictable these figures are over time.
How Does Customer Concentration Affect Business Value?
Customer concentration refers to how much of a business’s revenue depends on a small number of customers.
How Does Recurring Revenue Affect Business Value?
Recurring revenue refers to income that a business can reliably expect from repeat customers, service contracts, or ongoing relationships.
How Does Financial Reporting Affect Valuation?
The quality of a business’s financial records directly affects both its valuation and its ability to complete a sale.
What Is Owner Dependence in a Business?
Owner dependence describes how much a business relies on its current owner to operate, generate revenue, and maintain customer relationships.
What Is Business Transferability and Why Does It Matter?
Business transferability refers to how easily a business can continue operating successfully under a new owner. A highly transferable business can be handed off to a buyer with minimal disruption to customers, employees, and revenue.
What Is a Valuation Multiple and How Is It Calculated?
A valuation multiple is a simple way to estimate what a business may be worth based on its earnings or other financial metrics such as revenue.
What Is Seller’s Discretionary Earnings (SDE)?
Seller’s Discretionary Earnings (SDE) is a measure of total financial benefit to a single owner operator, typically calculated by taking net income and adding back owner compensation, interest, taxes, depreciation, amortization, and discretionary or non recurring expenses.
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