
There are some legitimate reasons why gross margins could significantly vary which may not be due to problems. For example, if a company had a significant shift in sales of products or services that have different levels of Cost of Goods Sold it could be a valid reason for a significant shift in overall gross margin. Yet, even this type of change may lead to buyer uncertainty because they could view the company as being less stable and certain.
If your company’s gross margins are fluctuating from year-to-year it is something you may want to either resolve prior to selling, or have a good explanation for the fluctuations that won’t cause buyers to perceive more risk.