A couple of years ago we sold a midwestern plastic injection molder with $15 million in sales, and very strong asset base (our owner estimated $12 – 15M in possible liquidation value).  The company was actually losing money – but had very high depreciation, and its cash flow was around $1 million per year. 

We talked to a huge range of potential buyers for that company, but 9 of 10 buyers passed, due to the high asset value relative to earnings.  We finally found half-a-dozen good suitors who were ready to be competitive in an attempt to buy.  The final contenders generally thought the company might be worth $5M for actual earnings value, but they also realized that even worst case, if the venture failed – it could probably bring $11 – 12M in liquidation.  The winning buyer paid $13 million cash for the entity. 

Since sale, the company has continued to do modestly better, and has now well justified the $13 million price tag as a very modest multiple for a growing and improving venture.