Anyone have experience with revenue drop?

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October 13, 2025

by a searcher from City University of New York, Brooklyn College in New York, NY, USA

Reviewing a company that has a 50+ year history, 2022 and 2023 were consistent. In 2024, the revenue dropped to half (according to seller it was because of more union jobs). Gut reaction is to submit an offer at a lower multiple due to the lower revenue, what do you think?
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Reply by a professional
in New York, NY, USA
Hi ^redacted‌, Several things here. 1. The seller and sellers broker will try to sell the company on a three year average basis. Don't fall for that. tell them you will price the company off of TTM (last 12 months, not###-###-#### If 2025 was trending up they would be quick to tell you. 2. Declining revenue leads to a lower EBITDA Multiple (or SDE Multiple) 3. If Margins are getting worse that also leads to a lower Multiple. 4. Ask about customer concentration, there may be a large customer that they just lost in 2024. 5. Ask ^redacted‌, a fantastic loan broker and ETA buyer advisors about financing. A lot of banks, will not finance a business that is losing money year over year. 6. Schedule a free call with me to discuss further calendly.com/qoeprep I help with the Quality of earnings and financial due diligence.
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Reply by a searcher
from University of Pennsylvania in West Chester, PA, USA
More union involvement sounds like the new norm rather than a temporary setback. Basing the valuation on that year's EBITDA sounds reasonable to me.
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