Business buyers and sellers need to be wary of naive business valuation generalizations. Valuation rules of thumb are easy to remember and apply, but lead frequently to misguided conclusions.
I recently talked to a veteran business owner that emphatically asserted that all businesses in his industry sell for between 50 percent and 80 percent of revenue.
Okay, let’s take two businesses, and apply the rule. Refer to the summary information on the company A and B chart.
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