SOP #58 — Seasonality Normalization That Reset a $70k Overpay

SOP #58 — Seasonality Normalization That Reset a $70k Overpay

Store listed in January on trailing-12-month profit of $13k/mo. Listing timing was the trick. Procedure:

1. Pull monthly revenue for 24 months — never trust a single trailing-12 figure near a peak season.
2. Split into peak vs off-peak months. Result: Nov-Dec did $31k/mo; the other 10 months did $9k/mo.
3. Recompute the multiple on a normalized run-rate, not the holiday-loaded average. The seller listed in January to bake Q4 into the trailing number.
4. Validate Q4 isn't structurally repeatable inventory — confirm it returns next year.

Outcome: real annualized run-rate was $11.2k/mo, not the $13k claimed. On a 32x multiple that gap was $58k. We priced off the normalized figure and saved roughly $70k versus the asking price built on a peak.

Save this — run it every deal.