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How to Sell Your Business for 2x More

Two identical businesses can sell for wildly different multiples. The gap is a handful of value drivers buyers pay up for, and engineering them before a sale is the highest-ROI work an owner can do.

10 min read

Two businesses earn the exact same profit. One sells for two and a half times that number; the other sells for four. The difference is not the market, the broker, or luck. It is a short list of value drivers that buyers reward with multiple, and the owner who understands them can move a sale price by hundreds of thousands of dollars without adding a single dollar of earnings.

The same earnings, a different price

Most owners assume their sale price is set by their profit. Earn more, sell for more; that is the whole story. It is not. The price of a small business is its profit multiplied by a number, and that number, the multiple, is set almost entirely by how risky the business looks to the person writing the check. Two companies with identical seller's discretionary earnings can carry multiples a full turn and a half apart, and on a mid-sized deal that gap dwarfs anything an extra year of growth would add.