How to Boost the Value of Your Business
One of the most frequent questions I’m asked is if there are standard multiples to value a business. I’m not aware of a “standard” multiple to value a business, but I can shed light on six things that often influence the value of the businesses we appraise.
- Build a Team (reduce key person dependence)
- Concentration, Not a Game (dependence on a few key customers or suppliers is risky)
- Debt, a Powerful Force (too much or too little leverage is a common problem)
- Keep it Clean (clear and credible financial reports matter)
- Size Matters (bigger companies are often worth more than smaller ones)
- Slow and Steady Wins the Race (growth is good, but can be deadly)
In future posts, we’ll expand on these points with a few simple action steps for each (and update this post with links to the corresponding entries).
If you would still like a rule of thumb or transaction multiples for your business or industry, following are a couple of excellent resources…
March 8th, 2010 at 1:33 pm
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