SMBs trade at lower multiples than larger ones because they are FRAGILE. Common issues include: - customer / vendor concentration - "key man" risk / little redundancy in roles - harder to access capital markets - less $ to invest in R&D, key hires, systems - poor / bad data
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“Diligence is a fixed cost” reminds me a bit of enterprise sales. Often costs the same to close a $10K deal as a $100K deal in terms of time and consultation.
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I know what you mean, but I’ve actually found the opposite, in many cases, to be true. Large companies have way slower sales cycles. Small businesses make faster decisions and the owners are more accessible.
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Legal fees are a lower percentage of bigger transactions, too.
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