Buying Criteria and Valuation Basics

I understand that selling your business is about much more than financials—it’s about our mutual fit. Here are the basics of what I’m looking for, and a guide to valuing your business, so you know how I approach this important decision.

Buying Criteria

  1. Geography: 860 Labs is a seeking to acquire companies within an hour drive from Waterford, CT. The closer, the better.

  2. Strategic Fit: Industry-agnostic, but preference for physical product companies—even better, branded manufacturing companies, those with U.S. domestic contract manufacturing, or those with a path to bringing production to the USA or vertically integrating. Companies should ideally have a strong customer base in their markets. I value longevity and consistency of customer demand over the latest technology and trends. Open to carve-outs and divestitures. No restaurants or personal/consumer services.

  3. Revenue: This is far less important than profitability: we are focused on acquiring cash flow.

  4. Profitability: This is the big one for me. 860 Labs is seeking deals that reliably produce in the $750,000 to $1 million in EBITDA, SDE, or net profit range. Because of this strategy, we cannot consider turnarounds, pre-revenue companies, and distressed assets at this time.

    1. EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) is a measure of the profit produced by the core business.

    2. SDE (Seller’s Discretionary Earnings) is available cash that can be used for owner’s compensation including personal expenses.

  5. Team and Culture: We seek companies that have a passionate, experienced team that embodies your company’s values. Company culture that aligns with collaboration and craftsmanship.

How I Value Your Business

Valuation might seem complex, but we take a transparent and respectful approach. Here’s a simple way to understand how we consider the value of your business:

  1. Start with adjusted EBITDA, which is how much profit your business generates from core operations.

  2. Apply a multiple: Businesses of this size and type are typically valued at 3x–4x EBITDA. The exact multiple depends on things like:

    1. Steadiness vs. volatility of financial performance

    2. Customer buying behavior (one-time, repeat, recurring, etc.)

    3. Product creation model (from manufacturing through import and distribution)

    4. Intangible assets (brand value, goodwill, and patents)

  3. Consider Assets and Inventory: I generally am not interested in Real Estate but will consider the Fair Market Value of assets and inventory.

    1. Inventory is typically valued at cost after aging adjustments.

    2. Accounts Receivable (AR) is usually added at face value with aging adjustments, and Accounts Payable (AP) are assumed.

    3. Any deal requires sufficient working capital for the buyer to maintain operations—I will not put your team in a position of stress on payday.

    4. Equipment, vehicles, and property may be added at fair market value.

What I Value Beyond Numbers

I don’t just look at financials. I care about:

  • Your vision: The future you’re trying to create for your customers.

  • Your people: The team that helped build your success.

  • Your legacy: Preserving the values and culture that define your brand.

Next Steps

If you’re considering selling your business, let’s have a conversation. Together, we’ll explore how we can grow what you’ve built and ensure your legacy continues to thrive.