The asking price is determined using a cash flow methodology. 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. A multi-factor multiplier is applied to the cash flow based on the condition of the business.
For this business, a 5-year average cash flow is applied. The multiplier applied in this case is 3.73x, on par with other commercial printing businesses of similar size and production capacity.