Glossary
Multiple
The number you multiply earnings by to get what a business is worth.
A business earning $200,000 sold at a 3x multiple is worth $600,000. Multiples vary by industry, size, growth rate and how dependent the business is on its owner.
The practical consequence is that improving profit improves value several times over. Cutting $50,000 of costs in a 3x business adds $150,000 to what it sells for.