We helped many business owners partner, merge or sell their companies in 2022. If you have thought about any of these, I promise you will want to read on!
None of the transactions we closed were for less than 7x earnings with the more recent ranging from 10-11x earnings. So if your normalized profit is $2M, this means an average valuation of $14,000,000 – $22,000,000 we might achieve for your company.
Below are some examples of client situations we helped with this past year:
Where we Learned from Mistakes:
Client Situation (Wrong Buyer): Our client’s company was continuing to perform well; however, the buyer we chose began coming up with reasons to lower the purchase price. These were nonsensical, fictitious number games. Since the purchase price was still attractive, it took two weeks of convincing our client to walk away. We were much more careful to choose the next buyer and although our client was not happy with the wasted time, he was grateful we convinced him we could find a better partner, and we eventually did.
Where we Exceeded Expectations:
Client Situation (Achieved 2x Client Expectations): When we started talking to our client, a company in his industry was looking to acquire him. That company had offered him $8M for his business. We took him through our process and he sold for over $16.5M. He had no idea how valuable his company was until we showed him.
Client Situation (10x Earnings Valuation): Our client had built a strong business doing $2-4M in normalized profit. He had started thinking about a succession plan but also had many growth ideas including starting a new division/service line. The company sold for a 10x earnings valuation, which involved negotiating to have the buyer pay upfront for the future growth of the new division.
Client Situation (Losing Money to Generational Wealth): Two years before talking with us, our client’s business had been losing money. Over the more recent two years, he had turned the company around. He had many goals for the transaction including: retaining 10% ownership, gifting 20% to his son (the current CEO) and a board seat. We completed all these goals and sold the company for $10-$11M. Much higher than our client had thought given the negative historical financials.
What about 2023?
We recently took another few clients to market and the valuations are even higher than what we saw in 2022.
With the potential recession looming, many business owners are coming to us looking to transact. We are going as fast as we can with all these clients to be sure their transaction happens as soon as possible (4-5 Months from engaging with us).
If you would like to learn more about the buyers in your market or want a complimentary exit plan review, our calendar is: