Buyers tend to be experienced in their offering process and their greatest challenge is to maintain “deal discipline.” They need to maintain basic valuation criteria and think of every deal as needing to be structured in a manner that an outside capital group or a board of directors would support in terms of the valuation and economics of the transaction. Sellers tend to be inexperienced; most entrepreneurs get to sell the culmination of their business career’s effort only once.
While “value may be in the eye of the beholder,” the market for recurring monthly revenue (RMR) is very liquid and has not varied radically over the last 20 years with regard to the valuation ranges that accompany good economic sense for varying sized companies.