Business Valuation Profit Multiplier
There are some national standards depending on industry type and business size.
Business valuation profit multiplier. For example if your company s adjusted net profit is 100 000 per year and you use a multiple like 4 then the value of the business will be calculated as 4 x 100 000 400 000. Bizbuysell says nationally the average business sells for around 0 6 times its annual revenue. In profit multiplier the value of the business is calculated by multiplying its profit.
To use the profit multiple valuation you need two figures to work with. Buyers guided by appraisers and business valuation experts use rules of thumb to value businesses based on multiples of business earnings.