As a rule-of-thumb, companies with under $20M in revenue tend to get discounted offers from potential buyers. The reason is simple: smaller companies carry higher risk for a buyer. To hedge that risk, buyers typically offer lower multiples.
Healthy businesses grow. However, there are three distinct options for growth. As we step into a new season, with deregulation on the horizon and over $1.9 trillion in private capital waiting to be invested, the way we think about growth matters.
In this article, we will explore different reasons someone might buy a company. These reasons span a spectrum of value, from low valuation to high valuation. Smart owners understand this and begin working today to set their company up for a high valuation.