WHAT JUSTIFIES A HIGHER OR LOWER SALES PRICE?

Higher Sales Price:

• -    A consistent historical record of growth and profitability
• -    10+ years in business
• -    Substantial hard asset value
• -    Owner retirement
• -    Absentee ownership
• -    Stable management team in place
• -    Long-term quality employees and customers
• -    A broad diverse customer base
• -    Apparent competitive advantages
• -    Proprietary or exclusive products
• -    Obvious opportunity for growth and/or obviously under-performing
• -    Very clean books and records
• -    Up to date assets and premises in superior condition
• -    Highly favorable lease terms or ownership of real property
• -    Desirable location
• -    A high demand enterprise (manufacturing, distribution, or business to business service)
• -    Easy to understand motivation for selling

Lower Sales Price:

• -    An inconsistent record of historical profitability
• -    Less than 3 years in business
• -    Little if any hard asset value
• -    Owner critical to operations, professional practices, or consulting
• -    Substantial involvement of family or partners in operations
• -    Few employees or a high employee turnover
• -    Small customer base
• -    A few customers accounting for substantial percentage of revenue
• -    No apparent barrier for completion to enter the business
• -    No clear opportunity for growth and/or improvement in operations
• -    Questionable financial records
• -    Out dated assets in need of replacement or heavy maintenance
• -    Obvious deferred maintenance or capital reinvestment
• -    Premises in disarray and/or unsuitable for operations
• -    Unfavorable terms on leases
• -    Undesirable location
• -    A low demand enterprise (retail, bar, restaurant, or personal services)
• -    Questionable rationale for sale