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Lesson · Business · value

Same business. Double the price.

Buyers pay a multiple of your profit — and the multiple itself moves. Clean books, recurring revenue, and a team that stays can multiply what the same business sells for.

36 MONTHS
Buyers and lenders review three years of books

HOW BUYERS PRICE YOU

SDE vs EBITDA

Main Street dealsMid-market, $5M+
Owner's cash flowNet plus interest, D and A
Adds back owner perksAssumes a paid manager

WORKED EXAMPLE

The Landscape Company

Owner cash flow, SDE$500,000
Typical market multiple3x
Business value$1,500,000
Hard assets included$1,200,000

Key points

What Buyers Will Let You Add Back

Owner's salary
One owner vehicle
Home office expense
Owner health insurance
One-time legal fees
Non-working family payroll

How it works

Raise Value Before You Sell

1
Document every add-backClean books, three years running
2
Trim assets to essentialsDon't gift equipment at closing
3
Grow SDE, not the fleetThe multiple applies to cash flow

BOTH EXTREMES COST YOU

Too Much Iron vs Worn Out Iron

$1.2M gear, $500K SDEOne-tooth excavator
Value near liquidationPriced near 1x cash flow
You gift the equipmentBuyer deducts repair cost

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Increase Your Business Value

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