Profit rose 30%. The valuation conversation was about the three years before.

A record year moves the price of a business less than owners expect, and the reason has little to do with the profit itself.

By Steve 5 min read
Abstract bridge artwork for Profit rose 30%. The valuation conversation was about the three years before.

An owner has the best year in the company’s history. Profit is up a third, the pipeline looks healthy, and the arithmetic seems obvious: apply a multiple to the new number and the business has become materially more valuable in twelve months. Then the conversation with a buyer, or an adviser, or a bank, goes somewhere else entirely. It goes to the three years before the record one, to who holds the customer relationships, to what the owner is actually paid, to how much cash sits in unbilled work. The…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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