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No matter the state of the market, business value drivers remain fairly constant. Buyers’ appetite for certain industries or industry segments reflects the current period. Yet, the attributes that auger for a higher selling price are always in play.

What are the primary value drivers? In no specific ranking, they are the following:

  1. Management depth and competence beyond the owner(s).
  2. The expected growth of the business segment and the competitive position of the firm (e.g. number 2 or 3).
  3. The base of customers that is recurring revenues.
  4. Solid gross and net profit margins and ability to scale business.
  5. Development/pipeline of new products or services.
  6. Ability to increase prices/reduce costs.
  7. Solid customer retention without concentration.
  8. Intellectual property (IP) owned and used to advantage versus competition.
  9. Non-cyclical business.
  10. Potential to add-on other sellers.
  11. Clean and clear financials and EBITDA.
  12. Systems controls and procedures in place and capable to handle growth.
  13. Business not susceptible to litigation.
  14. Employee retention is evident.
  15. Recognizable and positive culture.
  16. Quality of outside professional advisors.
  17. Capitalization table that is up-to-date and easily understood.
  18. Working capital calculation is explainable.