Daniel's score
How I score businesses
The score rates the business, not the price. Six categories, 0 to 5 points each. The total is the sum divided by three, rounded to one decimal place.
01
What the score cannot judge
A buyer checks these with their own advisors. The score does not replace that.
- Whether the price is fair.
- Future development of the market and industry.
- The legal state of the business (debts, disputes, liens, arrears) without a legal and accounting review.
- The value of real estate.
- Tax consequences of the sale.
- Whether the business is right for you.
02
Six categories
0 points means a fundamental problem; 2 and 4 points lie between the described levels.
Numbers
Can the numbers be documented and are they stable for at least 3 years?
- 1 point
- verbal figures only or big swings
- 3 points
- tax returns for 3 years, small swings
- 5 points
- documents for 3+ years, stable or growing profit
Independence from owner
Does the business run for two weeks without the owner?
- 1 point
- it stops without the owner
- 3 points
- it manages a week, the owner holds key relationships
- 5 points
- it runs without the owner, people and processes are in place
Customers
Many customers, or one holding a large share of revenue?
- 1 point
- one customer above half of revenue
- 3 points
- the largest below a third of revenue
- 5 points
- spread out and returning
People
Will the team stay and is it clear who knows what?
- 1 point
- a key person leaves with the owner
- 3 points
- the team stays, know-how is in their heads
- 5 points
- the team stays, processes are written down
Operations
Lease, premises, equipment, contracts.
- 1 point
- lease ends within a year, equipment needs replacing
- 3 points
- lease for at least 2 years, routine investment
- 5 points
- long lease or own premises, equipment in order
Handover
Reason for sale, willingness to train, transition period.
- 1 point
- unclear reason, owner wants to leave at once
- 3 points
- clear reason, training up to 3 months
- 5 points
- clear reason, training 6+ months, handover plan
03
Score rules
- Rates the business, not the price
- This sentence stands next to every score, on the record and in the video.
- Independent of payment
- The score does not depend on whether the seller paid for the video or on the scope of cooperation.
- It can change
- When the seller provides new documents, the score can change. The record then shows the date and reason.