M&A advisor on how buyers value trades businesses by cashflow multiple

Bartlett explains that the value of a trades business is a multiple of its true cashflow profit, with buyers typically paying three to four times for a smaller business and higher multiples (five to seven times) for larger businesses with management infrastructure that reduces owner dependency.

“So a million dollar business that's kicking off $250 ,000 of cashflow, buyers probably going to pay between three and four times cashflow for the business.”

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