Online business valuation glossary

Asking price

What the seller would like. It is a position, not a fact about the asset, and on most marketplaces it is the only number published. Treating asks as sales inflates a comp set systematically — see asking price vs sold price.

Sold price

What a buyer actually paid. The only price we record as a comp, and the reason a listing that says "sold" over a block labelled "asking price" does not qualify.

Reserve, and "reserve met"

The minimum an auction seller will accept. An auction that ends below its reserve produces a highest bid and no sale — the seller declined at that number. We ingest auctions whose page states the reserve was met, and skip the rest.

Classified listing

A fixed-price listing rather than an auction. Some marketplaces mark a classified as sold while still labelling its figure an asking price; the label is the part that tells the truth, and that combination is why whole categories of listing are excluded from our data.

Headline price

The number in the announcement. It may fold in inventory, deferred payments or an earn-out, so it is a total consideration at best and a ceiling at worst. What a headline sale price includes takes it apart.

Earn-out

Payment contingent on the business hitting targets after the sale. "Up to $2M" is the maximum the seller could ever receive, not the price paid. Deferred but fixed amounts are part of a price; contingent maxima are not.

Escrow

A third party holding the money until the assets transfer. A cost of the deal rather than a component of the price, and one of several reasons your budget is larger than your offer.

Revenue

The money coming in, before costs. Useful when there is no profit to speak of, and misleading whenever costs are the interesting part.

Net profit

Revenue minus the costs of running the business. At this deal size it is almost always a figure the seller computed, not one an accountant attested.

Seller's discretionary earnings (SDE)

Net profit with the owner's own compensation and one-off or personal costs added back — an estimate of what the business would produce for a new owner doing the work themselves. It is the default basis for micro-acquisitions and the most elastic number in any listing. Which add-backs survive is the longer answer.

Add-back

A cost removed from net profit on the argument that a new owner would not incur it. Legitimate for genuine one-offs and the owner's salary; not legitimate for costs the business will keep having. Every add-back raises the profit figure and therefore the price.

TTM (trailing twelve months)

The twelve months ending at the sale, rather than a calendar year or a forecast. Multiples are conventionally quoted against TTM figures, so a multiple built on any other period is a different statistic wearing the same name.

Annualized monthly

One month's figure multiplied by twelve. It silently assumes a flat year — no seasonality, no trend, no bad month. Where a listing gives us nothing else we do the arithmetic and grade the row estimated so the assumption stays visible. Is that multiple monthly or annual?

MRR and ARR

Monthly and annual recurring revenue — the subscription slice of revenue, excluding one-off sales. Ask which customers are counted and at what point they stop counting; churn is the difference between recurring revenue and a good month.

Comp (comparable sale)

A completed sale of a similar enough asset to inform the price of another. "Similar enough" means four matches, not one: asset type, size, business model and recency — what makes a sold comp comparable.

Profit multiple

Sold price ÷ TTM profit. Read the other way it is a payback period: 3× means three years of unchanged profit to earn the purchase price back. What a profit multiple actually means.

Revenue multiple

Sold price ÷ TTM revenue. The fallback when there is no profit to divide by, and not interchangeable with a profit multiple — the two answer different questions.

Basis

Which of the two a valuation is built on. Ours is decided by the subject's own figures: positive TTM profit means the profit basis, anything else falls back to revenue.

Median

The middle value of a sorted sample — half above, half below. Preferred to an average here because sale prices are skewed: one $2M deal drags an average away from every other row.

Interquartile range (the middle half)

The 25th to 75th percentile: the middle half of a sample, with the top and bottom quarters set aside. It is what our estimator returns instead of a single number, because a point estimate from a skewed sample implies a precision the data does not have.

Tail trim

Dropping the extreme 5% at each end of a sample before computing anything, once the sample reaches twenty rows. It stops one mispriced outlier from setting the top of a band.

Size mismatch

The subject being four times larger or smaller than the median comparable sale. Past that ratio the comp set is describing a different market, and our report says so rather than quietly pricing you against it.

Payback period

How long the business's profit takes to return the purchase price. The same arithmetic as a profit multiple, in the units a buyer actually thinks in — the payback framing.

These are ours rather than the industry's. They exist because a comp set is only as good as its weakest row, and hiding which rows are weak is how comp sets become marketing.

verified

Figures the marketplace itself verified, where the page states that.

reported

Figures the source states, carried through as published. Most rows are here. The seller said it; we recorded that they said it, and linked the page.

estimated

Figures we derived — most often a monthly figure annualized. Derivation is disclosed rather than smoothed in.

demo

Placeholder rows from before we had data. They are excluded from every valuation in SQL and again in the estimator, and they keep the grade permanently.

Self-reported

A deal submitted by a buyer or seller rather than collected from a public page. Email-confirmed, reviewed before publication, and marked — a row without a public source link is only ever accepted this way.

Source URL and evidence reference

The source URL is the page that states the numbers; a row that is not self-reported cannot exist without one. An evidence reference is a supporting pointer where the stating page and the confirming page differ. Where sold-price data comes from sets out which sources we can use at all.

Correction

A recorded change to a published row, with a stated reason. Numbers move when a source page turns out to say something different; the change and the reason are kept rather than overwritten.