Hi. Businesses are traditionally valued at 3 - 5 times their annual net profit or 1x their annual turnover.

If they have not been achieving those profits levels for 3 years and/or there are reasons why that wouldn't be sustained for a further 3 years, the valuation comes down.

When I sold my own agency, our retained monthly income exceeded our costs and these were annual contracts.

I hope this helps.

Mark

Mark Walmsley
mark@markwalmsley.co.uk
https://lnkd.in/db6tqkE