37 karma · joined September 16, 2012
The problem with setting benchmarks are where do you set them? There is already a program know as the EB-5 program that requires you to invest $1MM ($500k in economic development zones) and create 10 jobs and after 3-4 years you can get a green card.
What it seems like happened is the customer paid all or a portion of the contract in advance. As such, the business recorded an increase in cash and had a corresponding liability recorded for unearned revenue. What likely happened was this cash was used to pay expenses and/or pulled out of the business and all that was left was a liability. Thus, it wasn't the fact that he had a future $175k contract that made the business worth less, but the fact that he used the funds he had been paid with for something other than the event. Thus, the author had less cash than he should have, which the buyer deducted from the sales price.