You must shy away from any opinion that says something like “your business should sell for around 4x profit because that’s what the market is doing at present.”

In reality, certain businesses if set up and structured correctly can sell for well above 7x profit while more than 50% of smaller businesses can never sell beyond the value of their physical assets.

At Strategic Transactions, we’ve mapped thousands of publicised sales and acquisitions of Australian entities since 2016, either to a private or a public concern, international or domestic. From this we’ve created a simulation that weights every factor that buyers evaluate in a business. They include the following:

  • Trends in sales & profits over last 2-3 years
  • Anticipated trends in sales & profits over next 2-3 years
  • Buyer profile & needs (merits a whole blog to itself!)
  • Industry trends (ditto!)
  • Level of business automation – and consequent reliance on owner.
  • Ability to adapt to technological change
  • Amount of guaranteed recurring revenue & dependency on fewer customers
  • How desperate you are to sell and how willing you are tov stay in the business after sale as an earn out. (another blog!)
  • Whether your business can be easily scaled.
  • The extent to which you can dictate price.
  • Your ownership of intellectual property
  • A vision and consequent pipeline of new products & services.

Through this we found that a business with a turnover of $1m and a profit of $100k could reasonably be valued at anything from $9,900 to $704,000 – a variable multiple from 0.1x profit to 7x profit.

Much of this variation depends on how well you’ve incorporate the following assets in your business.


You may be setting some value creation goals for your business in 2020 – regardless for whether you anticipate selling or not. Through this, you can assess whether your hard work is actually creating value.
If so, why not benchmark your value pre-2020 and reassess your business every 3 months or so, by running Quick Value again?
Simply google Quick Value Strategic Transactions. Try the quick, free and confidential Quick Value tool. And give yourself some value creation goals for 2020.
Simply google Quick Value Strategic Transactions. Try the quick, free and confidential Quick Value tool. And give yourself some value creation goals for 2020.

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