When deciding to sell a business, which offer would be more favorable?

When considering an offer to sell a business, an offer that reflects three times the book value is more favorable because it typically indicates that the buyer recognizes the intrinsic value of the business beyond just its physical assets and liabilities.

Book value is a measure of a company's worth based on its balance sheet, reflecting the value of its assets minus any liabilities. An offer of three times the book value suggests that the buyer is willing to invest significantly more than what the raw financial statements indicate, likely because they see additional potential for profitability or growth that isn't captured in the book value alone.

This could imply the buyer recognizes factors such as goodwill, brand reputation, customer loyalty, and the potential for future revenue, which are all critical elements that contribute to a company's overall value. In contrast, offers based on less direct measures, like customer counts or less than annual earnings, might not adequately reflect the true worth of the business and could signify a lack of confidence in potential future earnings. Hence, an offer at three times book value is typically seen as a strong indication of the business's desirability in the marketplace.