Get your probability score for a successful sale. See whether your business will be valued by buyers on the low, mid, or high end of the price range for businesses like yours.
This assessment is anonymous. No personally-identifiable information is captured unless you choose to supply it for a free consultation. Select only one answer per question. Click “Hint” at the bottom of each question for more context. Your answers and results are confidential. Learn more about this assessment.
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Your score appears low. Perhaps you did not answer every question?
Your score is below average for most sellers. You might find it difficult to sell your business unless the fundamentals are improved. Schedule a call with one of our advisors to discuss your results and how to improve your business before selling it.
You appear to have a reasonably good chance of selling your business, but it will be on the low end of the valuation range for businesses like yours. Schedule a call with one of our advisors to discuss your results and how to improve your business before selling it.
You appear to have a very good chance of selling your business. It will likely be priced in the mid range of the valuation scale for businesses like yours. Schedule a call with one of our advisors to discuss your results and how to improve your business before selling it.
You appear to have an excellent chance of selling your business. It will likely be priced on the high end of the valuation scale for businesses like yours. Schedule a call with one of our advisors to discuss your results and how to improve your business before selling it.
How unique is your product/service relative to similar offerings in your served market?
Uniqueness is a function of the features and benefits your solution offers that other solutions do not or can not offer.
Does your product/service have at least one significant and sustainable competitive advantage, either an important feature, benefit or value point over competitive offerings?
A significant advantage is one that is valued by customers and competitors do not offer. A sustainable advantage is one the competitors can not easily replicate because they do not have the capability, or would infringe your intellectual property.
Is your product/service supported by intellectual property (IP) that creates barriers to entry, like patents, trade secrets, proprietary data, processes or systems, that competitors would have difficulty replicating without incurring liability for infringement?
Both financial buyers and strategic buyers value intellectual property highly, if it has been commercialized, or can readily be brought to market with their resources. Tip: if you have one or more patents, it will be very useful to have an independent patent valuation done.
How scalable and repeatable is your product?
Scalability is the capability of a product or process to handle a growing amount of work, or its potential to be enlarged to accommodate that growth. Repeatable is the extent to which it can be produced, distributed and/or sold over-and-over without customizations or changes.
What are your gross margins (total sales minus COGS)?
Gross margin is a company’s total sales revenue minus its cost of goods sold (COGS), divided by total sales revenue, expressed as a percentage.
How dependent is your product or service upon your any one component suppliers?
In this context, dependent means you would not be able to make the product or deliver the service without your suppliers.
How well documented and learnable are your product/service production, assembly, delivery processes and systems?
Documented means you have a A-Z operations manual. Learnable means new hires can follow the manual and training to build the products or provide the services.
How big is the market segment or niche your company is currently serving?
If you do not know the size of your market segment in $, select the answer that equates to: very large, large, medium, or small, in your opinion.
What is your relative share of the market segment or niche your company is currently serving?
If you don’t know your share of the market as a percentage, select the answer that equates to your relative share as large, medium, or small.
According to industry and market analysts, how fast is your total addressable market growing?
Total Addressable Market (TAM), also called total available market, is a term that is typically used to reference the TOTAL revenue opportunity available for a product or service by all companies in the market.
Do you sell direct, or do you have multiple sales and distribution channels?
Multiple sales and distribution channels means selling through retailers and / or multiple e-commerce web sites. Selling direct means all orders go through you and only you collect the payments.
How dependent is your business on any one sales, distribution or lead referral channel?
If more than 50% of your revenue comes from just one distributor, partner, or advertising outlet, that would be a high dependency.
When considering the entire market landscape in which your business competes, how important is price among your customers, competitors, sales and distribution partners?
Price sensitivity among customers in a particular market is an important valuation metric for many buyers.
Do you know the Cost to Acquire a new Customer (CAC)?
Customer Acquisition Cost (CAC) is the cost incurred by the organization to convince a potential customer to buy. It plays a major role in calculating the value of the customer to the company and the resulting return on investment (ROI) of acquisition. This number is typically calculated by dividing a company’s quarterly or annual marketing and sales costs by the number of new customers it attracted in the same period. Sometimes, existing customer accounts that need to be renewed with additional marketing and sales investments can be included in the calculation, but typically, CAC means new customers.
Do you know the Life Time Value (LTV) of a typical customer?
LTV is a prediction of the net profit attributed to the entire future relationship with a customer. For example, if the typical customer buys $300 per year and can be expected to keep buying for at least 3 years, the LTV is $900.
Do you know your customer churn rate?
Churn rate (sometimes called attrition rate), is a measure of the number of customers moving out of a collective group over a specific period. It is one of two primary factors that determine the steady-state level of customers a business will support.
Do you survey your customers regularly to gauge their level of satisfaction with your company, products and services?
Surveys can be formal or informal, written or verbalized, but provide a reasonable measure of customer happiness with a particular product or service.
Do you know your Net Promoter Score and how likely customers are to recommend your products and services to friends and colleagues (or to other businesses)?
Net Promoter or Net Promoter Score (NPS) is a management tool that can be used to gauge the loyalty of a firm’s customer relationships. It serves as an alternative to traditional customer satisfaction research and can be correlated with revenue growth.
How dependent are you upon a small subset of customers for a majority of your revenue?
As a benchmark, if any one customer represents more than 30% of your revenue, most buyers consider it a high dependency. More than 50%, very high dependency.
Does your core team have breadth and depth of experience in the industry that is commensurate with that of your top three competitors?
If you are not sure whether the experience of your team is commensurate with that of your top competitors, check out their job descriptions and profiles on the web. Linkedin is a good source of intelligence on employees of competitors.
How dependent is the business on the owner, or any one key employee? [-]
A business that needs YOU to run it can not be sold.
Has the business independently surveyed its employees, or received an Employee Net Promoter Score, to gauge their level of job engagement and satisfaction, and whether they would recommend open positions to their friends and colleagues?
This refers to your employee Net Promoter Score (eNPS).
Can the owner and members of the core team pass a background check, and can they engender trust among potential acquirers?
A background check usually consists of professional accreditation, sanctions, civil and criminal actions, and financial credit worthiness.
If the business were acquired and the core team were offered positions with the same relative responsibilities and compensation they now have, would the team go with the buyer?
This is an important issue if continuity is important to the buyer.
Does your business own any proprietary systems or processes that are important in the operational efficiency, growth and management, of the business?
Proprietary means you invented them, or licensed and customized them, and no other business has them unless licensed through you.
Are all of your systems and processes for operating the business well documented and teachable to people with the necessary training and skills?
Documented means people can read the documentation or complete a training program to be able to operate the systems and follow the processes.
Would you say your business operates with uniformity, consistency, and predictability across all departments and functions?
Uniformity and consistency means no deviation in output or productivity between departments. Marketing runs as efficiently as accounting and accounting runs as efficiently as operations, and so forth.
Does the company have a Standards Manual, by company, by department and/or function, and does every person in the company know the standards by which the company will hold them accountable?
A Standard’s Manual is written, detailed and current. Vision statements and checklists do not count.
Would you say your company is run more by force of personality, or more by institutional systems, processes, policies and procedures?
If every decision, large and small, needs to be made by the owner or key manager, the business is run by personalities not by systems.
Does your company depend upon a supply chain for its raw goods, or for other critical parts of the business?
Supply chain refers to things sourced from outside the company that are critical to its operations.
Are there any critical systems the company does not own or control for generating revenue or running operations, and which are not readily replaceable?
Critical systems means the breakdown or loss of such systems would prevent it from operating or generating revenue until the systems could be fixed or replaced.
How transferable are your proprietary or critical systems and processes to another party, even if the party were located in a different geography?
Transferable means all assets needed to run the business can be moved to the buyer’s location.
What were the average annual gross revenues for the last three years?
Add your gross revenue for the last three years and divide by 3. If you have only generated revenue the last two years, add and divide by 2.
What were the average annual earnings (EBITDA) for the last three years?
A company’s Earnings before Interest, Taxes, Depreciation, and Amortization is an accounting measure calculated using a company’s net earnings, before interest expenses, taxes, depreciation, and amortization are subtracted, as a proxy for a company’s current operating profitability.
Has the company’s average annual REVENUES grown consecutively over the last three years? Up year-over-year?
Consecutive revenue growth means overall revenues steadily increased year-over-year, even if revenue did not increase in certain months.
Has the company’s average annual EARNINGS grown consecutively over the last three years? Up year-over-year?
Consecutive EARNINGS growth means overall earnings steadily increased year-over-year, even if earnings did not increase in certain months or quarters.
Has the company been cash-flow positive each month over the last 24-months?
Cash flow means enough income — or money in the bank — to cover critical operating expenses each month. Cash flow can come from loans, lines of credit, or investors, if sales are not sufficient to cover expenses.
Do your customers pay for some or all of your products in advance?
If you collect part or all of the payment before you manufacture or deliver the product or service to the customer, that would be considered an advance payment.
How much of your revenue is recurring, meaning customers pay on a monthly or quarterly basis for more than 12 months?
Recurring revenue is the portion of a company’s revenue that is likely to continue in the future. Recurring revenue is revenue that is predictable, stable and can be counted on in the future with a high degree of certainty.
What has been your average annual net profit margins the last three years?
Net profit margin is the percentage of revenue remaining after all operating expenses, interest, taxes and preferred stock dividends (but not common stock dividends) have been deducted from a company’s total revenue.
Are your business finances structured to maximize owner benefit (also called Seller Discretionary Earnings), meaning a certain portion of the owner’s personal expenses are covered by the business, such as car payments, boat payments, cell phone, travel, meals and entertainment, in order to reduce taxable income?
Seller’s Discretionary Earnings (“SDE”) is an estimate of the total financial benefit a full-time owner/operator would derive from the business on an annual basis. It is also variously referred to as Seller’s Discretionary Cash Flow, Adjusted Cash Flow, Owner Benefit, or Normalized Earnings.
Does the company have sufficient cash reserves to operate at a baseline level for at least 12-months in the event of a sudden and severe downturn in sales or collections?
Cash reserves include lines of credit the business could tap if needed, or loans from the owner.
Has your company developed a conservative 2-3 year proforma and does it show appreciable growth in revenues and/or earnings?
A pro forma financial statement is one based on certain assumptions and projections. A good pro forma shows growth in revenue and/or earnings. Buyers often want to see projected balance sheets, income statements, and statements of cash flows.
Is the company’s corporate status and required filings with the state current, including Articles of Incorporation, Bylaws, Amendments, Qualifications as a Foreign Entity, Annual Reports, and does it hold a recent Certificate of Good Standing from the Secretary of State?
Search for your company on the secretary of state website. Most states provide public data on whether or not a company is active and compliant with all required filings.
Are all the company’s local, state and federal permits, licenses, certifications and approvals required to be held by the company current and in full compliance?
Good idea to double check that all required licenses and permits are current.
Is the company being audited by the IRS, or has it received any notifications from the state tax authorities or IRS of any deficiencies in its filings, or notices of pending audits?
Being under routine audit is not a deal killer, but should be disclosed to prospective buyers.
Have all the company’s required employee tax withholding reports and payments been filed, as well as all workman compensation and unemployment insurance payments been made (if applicable)?
Good idea to double check before listing your business.
Have any liens of any kind by any party been filed against the company?
Be sure to run a UCC lien search to confirm no past creditor or vendor filed a lien against your company and neglected to remove it after they received payment.
Are there any pending or threatened litigations or legal disputes of any kind by any party?
This is the type of information you will need to disclose during buyer due diligence.
Is the company or its officers or directors in possession of any documents or information, whether written or oral, that could materially adversely affect the present or future value of the company or products?
This is a catch-all question you will likely be asked during due diligence.