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About Blog - Lauren PearlWhen you're buying a business, what are you buying?I was recently discussing an M&A deal with a client involving a business they were considering purchasing.My client owns a related business, and we were exploring acquisitions to expedite growth.We'd looked at a lot of interesting businesses, warts and all, but one in particular sticks in my mind as a great lesson:There was something really funky about this one business we looked at:They had high forecasted revenues of $5M for the next 8 months.They were basing their valuation on a multiple of these revenue numbers.But they currently had almost zero cash in the bank, a couple hundred thousand in AR,They had some big bank & investor loans to pay on the balance sheet and a large interest expense,And they had $8M in deferred revenue.Anyone see what's wrong here?I often talk to founders about the difference between cash and revenue.When I…
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