Every so often, someone asks a question that sounds simple on the surface—but actually reveals one of the biggest misunderstandings about buying and selling businesses:
“How do I find comparable sales and apply the right multiple?”
It’s a fair question. After all, that’s exactly how things work in real estate. If you’re selling a house, you look at similar homes nearby, compare features, adjust for differences, and arrive at a reasonable price. Clean. Logical. Familiar.
But businesses? They don’t play by those rules. https://youtu.be/ANKKqemYCTs
The Temptation of the “Easy Comp”
Many buyers and owners assume there must be a neat list somewhere:
A set of recent transactions
A few tidy multiples
A formula you can apply to get the answer
That assumption comes from how transparent property sales are. Home transactions are public. Databases are rich. Comparisons are visible.
Business sales live in a completely different world.
The Hidden Nature of Business Transactions
Unlike property deals, most business sales are private. There’s no universal registry showing what changed hands and for how much. No standardized reporting. No requirement that details be shared publicly.
What data does exist is often collected voluntarily—and that introduces another challenge.
When deal information gets entered into transaction databases, it depends heavily on how the financials were interpreted and adjusted by whoever handled the deal. If earnings were normalized incorrectly, that flawed number becomes part of the dataset. One small judgment call can distort what looks like a reliable comparison.
So while databases can be useful, they’re far from foolproof.
Multiples Aren’t Universal—They’re Contextual
Here’s another common misconception: people want the multiple for their industry.
There isn’t one.
Even within the same industry, multiples shift dramatically depending on:
Size of the business
Stability of earnings
Customer concentration
Management structure
Growth trajectory
Risk profile
A smaller company may sell for a vastly different multiple than a larger, more systemized one—even if both produce similar products or services.
Simply grabbing a number and multiplying it by cash flow can produce a wildly misleading valuation.
Data Is Only as Good as the Person Using It
Even when you gain access to legitimate transaction data, interpretation is everything.
You must:
Filter deals by comparable revenue size (not just industry).
Recognize outliers that don’t make economic sense.
Understand how deal structure affects reported value.
Adjust for working capital, assets, and risk differences.
Without that context, the data can point you in the wrong direction faster than having no data at all.
The Real Skill Isn’t Finding Numbers—It’s Understanding Deals
People often believe the hard part is getting access to databases. In reality, the hard part is learning how to think about acquisitions properly.
Experienced advisors don’t just pull comps—they interpret patterns, question anomalies, and translate raw information into practical insight.
Ironically, the money many people consider spending on expensive datasets is often better invested in learning how transactions actually work. Once you understand deal mechanics, you can evaluate opportunities yourself and bring smarter questions to the table.
A Smarter Approach for Buyers and Owners
If you’re trying to value a business or assess an acquisition, focus less on chasing a magic multiple and more on developing deal literacy:
Learn how cash flow is truly calculated.
Understand why normalization matters.
Study how structure changes value.
Use comparables as reference points—not answers.
When you build that foundation, you stop looking for shortcuts and start making informed decisions.
And that’s when the real opportunities become visible—while others are still searching for a formula that doesn’t exist.
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