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In the sub-$5m space, the typical multiple tange is 2.5x to 4.0x.When companies show annual recurring revenue (ARR) figures figures above that, other factors come into play that could increase the multiple dramatically, but these are still regarded as outliers.Even though the range mentioned above sounds specific, the gap between the two extremes (2.5x and 4.0) represents a very big difference in selling price. Whether you are serious about selling, or simply beginning to prepare for a possible future exit, there is immense value in determining exactly where your company sits in this spectrum.At FE International, we use a sophisticated and reliable valuation method that takes between 80-100 data points into consideration when calculating a company’s valuation multiple.Below is an extract of the comprehensive checklist of data we analyze when performing this investigation.NicheWhat level of threat does established competitors pose?Are there any expansion options available within the company’s niche?Is the niche evergreen?OperationsWhat level of technical know-how is required to manage the business?How are current staff members and contractors managed?What standard operating procedures (SOPs) are in place?FinancialsHow has the gross and net income been trending for the past 1 - 3 years?How stable is the company’s earning power?Are there any anomalies in the business’ financial history and can they be explained?Customer baseWhat is the customer churn rate and lifetime value?How much does it cost to acquire a new customer?Why is the business losing customers?TrafficAre current referral programs effective and sustainable?How effective and secure are current search engine rankings?Has the site been affected by any Google algorithm changes or manual penalties?OtherAre there any specific locational responsibilities or physical assets with the business?Are there any licensing requirements in order to run the business?Is the company’s intellectual property (IP) protected?This investigative process is performed by specialist M&A advisors who will use their experience to analyze and interpret the various data points, arriving at a multiple figure that is an industry-vetted representation of your company’s value.Whether you are interested in finding out what your business is worth because you are serious about selling, or whether you are simply positioning yourself for a possible future exit, we highly recommend contacting one of our advisors who will be happy to discuss how we can help you perform such a valuation with no obligation on your part.You can also get more information on our valuation process by reading this article.We at FE International provide M&A advisory services for mid-market SaaS, e-commerce and content businesses. The company has become the pre-eminent advisor and valuation thought-leader in the industry, completing over 500 deals and upwards of $100M in sales in the past seven years.If you are looking to sell your online business, we can help you out. Fill out our free valuation form and we’ll get in touch.

They've outlived their usefulness in most industries. I'd like to first male a distinction. There are labor unions and trade unions, and I think we need to see them as different. Labor unions are organizations that serve and support people in jobs that tend to not have freelancers. Factory workers being the obvious members. A person who works a metal press for Honda, stamping out doors for Accords isn't likely going to strike out on his own. Trade unions do support freelancers. Electricians, machinists and carpenter's for example. While you may find these guys on a factory floor, you will just as likely see them on their own as independent businessmen and contractors. I will be talking about labor unions mostly.Labor unions did great and wonderful things. They were instrumental in workplace safety, child labor restrictions, limiting hours to ensure people had a life outside of work and making certain benefits standard operating procedures. Unfortunately for the unions, they did such a good job, these things became law. OSHA handles most of what unions used to handle. Workman’s compensation, overtime and fair hiring practices as well as minimum wage hits about everything else.This leaves unions only one area, compensation above minimum wage. To a lesser extent, hiring and firing, but that lumps in with compensation. And, because of this, it's gotten a bit toxic. Wages outpaced productivity and companies were forced to close factories. Seniority based retention and pay plans meant that it was harder to promote and retain the best workers as opposed to the oldest workers. It motivated employers to just not hire union workers. It also motivated some of the best workers to work in non-union jobs. You want to know who hates the unions the most? Toyota, Mercedes, Honda and BMW employees. These people get compensated very well for what they do. They have excellent perks and benefits. They have very little in the way of layoffs. Their products are considered among the highest quality products in the world. They don't have unions, thus they don't have union fees. They don't have people who are taking up space and money as a union representative.If unions want a place in America again, they need to adapt. They need to see themselves as partners with the companies they work with. They need to see the companies health as priority number one and look to ways in which management can increase productivity through appropriate compensation practices and policies. If they can't do that, if they can't kick out the corruption and erase that stigma, they're doomed.

I hesitate to use the word “simple” when discussing valuations - or at least valuations accurate enough to carry any worth for business owners or serious prospective investors.If you would like an accurate valuation there is not simple formula that can be used, as there are dozens of pieces of information that should be used to accurate value a business. Regardless of your need for the valuation, simply having a “ballpark” figure is rarely as valuable as you may think it is.The accuracy and worth of a valuation is directly proportionate to the amount of diligence applied when calculating it.At FE International we start the valuation process by first determining either the Seller Discretionary Earnings (SDE) or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) figures, depending on the size of the business.We recommend using SDE as we have found it the most appropriate for businesses in the small to medium sized business (SMB) space.SDE is the profit left to the business owner once all costs of goods sold and critical (i.e. non-discretionary) operating expenses have been deducted from gross income. Crucially, any owner salary can be added back to the profit number to reflect the true earnings power of the business.The SDE can be calculated using the following simple formula:Once the SDE has been established, we delve into the far more resource-intensive task of establishing the valuation multiple, an activity that is heavily dependent on industry and niche-specific knowledge as well as the capacity for research.Without applying this amount of diligence, the variance between the valuation multiple (typically between 2.5x and 4.0x) is unfeasibly wide.Here is a short extract of the 80 - 100 factors that FE International investigate when performing a valuation:TrafficHow effective and secure are current search engine rankings?Has the site been affected by any Google algorithm changes or manual penalties?Are current referral programs sustainable and effective?NicheAre there any established competitors within the company’s niche and what level of threat do they pose?What expansion options are available to the company?Is the niche evergreen?Customer baseWhat is the customer lifetime value and churn rate?What is the cost of acquiring a new customer?Is the business losing customers? What are the reasons for this?OperationsWhat level of technical knowledge is required to manage the business?How are current staff members and contractors managed?Are there standard operating procedures (SOPs) in place?FinancialsHow has the gross and net income been trending for the past 1 - 3 years?Is the company’s earning power stable?Is there an explanation for any anomalies in the business’ financial history be explained?OtherAre there physical assets or specific locational responsibilities with the business?Is the business dependent on any licensing requirements in order to run?Is the company’s intellectual property adequately protected?As I mentioned, these areas of investigation represent a small portion of the diligence FE International’s M&A advisors apply when performing a valuation. Feel free to get in touch with one of them if you’d like to go through our comprehensive and obligation-free valuation process. You can also get a more in-depth look at the process here.We at FE International provide M&A advisory services for mid-market SaaS, e-commerce and content businesses. The company has become the pre-eminent advisor and valuation thought-leader in the industry, completing over 500 deals and upwards of $100M in sales in the past seven years.If you are looking to sell your online business, we can help you out. Fill out our free valuation form and we’ll get in touch