July 29, 2024

Take Five #111: Ways to increase business value through revenue quality (not quantity), and more

Take Five #111: Ways to increase business value through revenue quality (not quantity), and more

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Take Five #111: Ways to increase business value through revenue quality (not quantity), and more

1. Some recent e-commerce SMB exit figures and valuation analysis

We spent the last 2 months analyzing 70 SMBs (eCom & Amazon) that exited between January 1, 2023–May 15, 2023 to get you better data on where SMB multiples currently are.

M&A Note: Multiples is the multiplier of Earnings (what we call EBITDA/Net Income) to understand how much the biz is worth. (Biz X made $1m in Net Income. With a 3x multiple, it’s worth $3m for someone else to buy it.)

Context to know:

-Total offers
: 187 (2.7 offers/deal)
-Total transaction value
: $84.7m
-Transaction range
: $34k–$7.25m
-Median multiple
: 3x
-Median earnings/biz
: $382.6k/biz/yr

Note: The data that we’re analyzing is what these bizs closed for. Not what they were asking originally.

Read Let’s Buy a Biz’s report summary here.

2. Boring business of the week: Fencing company

3. Memorandum of Understanding (MOU) helps business partners establish expectations (sample doc in thread)

4. Ways to increase business value through revenue quality (not quantity)

5. Business’s accrual-basis financials look good, but cash-basis tax returns tell a different story…SMB lender discusses how to approach a potential purchase

Loved what you read? Subscribe to Take Five to get our top quick reads every week from the team at Kumo. Kumo aggregates thousands of sources into one easy-to-use platform so that you can spend less time sourcing, and more time closing deals.