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There are a couple of reasons for this: Asset managers can see cashflow and earnings fluctuate wildly with markets. For alternative asset managers such as hedge funds, their cashflows may be cut by more than half as profits fall and they collect a smaller fee from their profit participation agreements.
And this applies to any type of deal, not just the sale of a business, where terms influence the price. Let’s say that the historical (benchmark) standard for the pricing of a business of a certain size and in a certain industry is four times pre-tax profit. Paying a moderate amount over the benchmark price is fine (10%).
They're typically engaged by clients who have solid sales or have seen tremendous growth and struggle to keep up with delivery. They identify potential to improve results by looking at your numbers and comparing it to benchmarks. What can you afford: CashFlow Cashflow is king for small business. If yes, great.
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