Questions

Businesses are valued as a function of their cash flow.
In a contract service business, the cash flow can be tied to the contracts that are in place.
Here is the problem, if the contracts don't go very far into the future, then you won't get a very high multiple of cash flow as a business valuation because the continuity of the cash flow is uncertain.
This is why many businesses in this space sell on terms related to the performance of the business in the years after the transition.
If you're thinking about selling your marketing agency, arrange a call and I'll tell you about some other deals I've done with similar businesses.

Cheers
dave


Answered 2 years ago

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