The asking price is determined using a cash flow and historical sales. Cash flow is the sum of net income from the business plus any non-cash expenses, non-recurring items and any seller’s personal expenses. The historical sales show a multiple of 3x SDE. A multi-factor multiplier is applied to the cash flow based on the condition of the business and the uniqueness of the business.
For this business, a three-year average cash flow is applied making the business price more favorable to the buyer. The multiplier applied in this case is 3x.
The SDE value takes into account time to build up the goodwill and customer base. If you were to start another like business startup costs would be low, gaining credibility with pharmacies would be difficult.