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Twenty-minute listing screen

A quick first pass over a business-for-sale listing, so you can decide whether it deserves a call, an NDA or neither before you spend more time on it.

Work through this with the listing open. Write down what the listing says and, just as usefully, what it leaves out.

Time needed
About 20 minutes
Last updated
Author
Loupe editorial
Reviewer
Not yet reviewed

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The basics (about 5 minutes)

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  • If you cannot write it from the listing alone, note what is missing.

  • A short trading history gives you less evidence and usually lowers the value.

  • A business that keeps returning to market may have a price or a problem other buyers have already found.

The numbers (about 8 minutes)

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  • Check whether inventory, working capital, property, cash and debt are in or out.

  • The same business can show very different profit figures depending on the measure.

  • Outside SaaS, Loupe's valuation lowers the multiple for a fall of 5% to 20% and lowers it further for a fall of more than 20%.

  • Run the figures through the valuation tool to see an indicative range to compare against.

  • Loupe's valuation flags a value above 2.0 times revenue for any business other than software.

  • Loupe's valuation flags a margin above 50% outside software and content businesses.

The risks (about 5 minutes)

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  • One customer above 20% of revenue is worth raising early.

Decide the next step (about 2 minutes)

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  • Record the reason so you can compare this listing with the next one.

General information only, not legal, tax or financial advice. Adapt the checklist to the business in front of you and take professional advice where it matters.

Guides

  • How to read a business-for-sale listing

    A listing is a sales document written to win enquiries. This guide shows how to read its numbers, its wording and its gaps, and how to turn them into questions before you sign an NDA.

    10 minutes to read

  • How small businesses are valued

    Most small businesses are valued as a multiple of their earnings. This guide explains how the earnings basis is chosen, why size and quality move the multiple, and why an asking price is not a sale price.

    11 minutes to read

  • SDE and EBITDA explained with worked examples

    SDE and adjusted EBITDA both restate a business's profit for a buyer, but they answer different questions. This guide builds each one up line by line for two fictional businesses and shows which to use.

    9 minutes to read

  • From first call to letter of intent

    The steps between spotting a listing and signing a letter of intent, what to learn at each one and what a sound letter of intent should cover.

    10 minutes to read

Red flags to look for

  • Figures that change between the teaser and later documents

    Revenue, profit or add-backs in the teaser or listing do not match the information memorandum, the management accounts or the tax returns. Some changes have a simple explanation; others mean the first figures were never real.

    Severity: price it inSeller and process

  • A vague reason for sale

    The seller cannot or will not say clearly why the business is for sale, or the story changes. The real reason often tells you what to check first.

    Severity: price it inSeller and process

  • Repeated relisting or a long time on the market

    The business has been for sale for many months, or withdrawn and listed again, sometimes with a new broker, description or price. Other buyers may already have looked and walked away.

    Severity: price it inSeller and process

  • Margins far above industry norms

    Profit margins well above similar businesses can reflect a real advantage, but more often costs are missing, have been moved elsewhere or have not been paid yet.

    Severity: price it inFinancials

  • One-off revenue inside the last 12 months

    A contract, windfall or spike that will not repeat can sit inside the last 12 months and be priced as if it will. Take it out before you value the business.

    Severity: price it inFinancials

  • One customer above 20% of revenue

    When one customer brings in more than a fifth of revenue, much of the value you are buying depends on a relationship you do not yet control.

    Severity: price it inCustomers and revenue

Other checklists

  • Questions for the first seller call

    Questions to cover on a first call with a seller or their broker, grouped so the conversation stays natural and you still leave with the facts you need.

    About 45 minutes

Free tools

  • See a low, likely and high value from the figures you have, and whether the asking price holds up.

  • Answer about 15 quick questions about a listing to see which areas need checking.