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is there a rule of thumb for evaluating an asking selling price?

i understnad more detailed analysis is needed but if I make $1M a year, with 30% profit, is there a general asking price i can count on?

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We are financial consultants to a group of investors whom we have their consent to manage their funds which is in our custody for cooperation in joint venture business investments.

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Aug 9, 2017
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The BAF Group LLC

Not without the more detailed analysis you suggest. I agree with Douglas. The problem is that "rules of thumb" are filled with exceptions and side issues that can make or break the estimate.

Feb 27, 2010
Douglas Batts
Murphy Business & Financial Corporation
Collin County, TX
Premium Broker

Nick, if you "Google" your question, you will likely run across some web pages that discuss ballpark market/SDE multiples to apply to your business, for a ballpark valuation, based on your industry but these should be used with caution. (And you will not be able to count any any resulting calculations because valuing a business is far too complex to rely on the results of a simple formula.) Key considerations that these multiples can't take in consideration include quality of the business's books, how dependent is the business on the seller, historical financial performance of the business, customer mix/concentration, and competitive situation, to name a few. For a business of your revenue size, i highly recommend you get a business appraisal from a certified appraiser. Without one, you risk leaving money on the table or not being able to sell it at all.

Feb 27, 2010

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