Pricing Trends for Small and Unprofitable ARM Companies

Kaulkin Ginsberg defines small ARM companies as entities with annual revenues (or net fees) amounting to less than $5 million. 

As we enter 2022, pricing for small size accounts receivable management (ARM) companies falls in the range of 2-4 times seller’s annual discretionary earnings. Buyers may use a structured transaction to assure business continuity by keeping the owner invested post-closing. The multiple that a buyer applies is typically at the lower end of the range when higher amounts of cash are paid to the seller at closing. Owners of unprofitable ARM companies should anticipate pricing to be calculated as a small percentage of their company’s operating revenues to be paid over a negotiated, but finite, period of time.

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