VALUATIONS

One of the most crucial parts of selling your business is determining an accurate and fair value. This can be done in different ways. Our experts will look closely at your business and determine what we believe is a good expected purchase price given the current market conditions. Many different factors determine what buyers are willing to pay for your company. Contact us for a free estimated valuation.

Cash Flow

Copied from sunbelt - adjust wording significantly “Fundamentally, a buyer purchases a business for income. Cash flow can be expressed in many ways, typically either as Earning Before Interest, Taxes, Depreciation and Amortization (EBITDA) or Seller’s Discretionary Earnings (SDE). In small business transactions, SDE or EBITDA is the most common basis for establishing a selling price.”

Goodwill

Copied from investopedia - adjust wording significantly “Business goodwill is an intangible asset owned by and associated with the operation of a company. Goodwill is the premium that is paid when a business is acquired. If a business is acquired for more than its book value, the acquiring business is paying for intangible items such as intellectual property, brand recognition, skilled labor, and customer loyalty.”

Market Conditions

copied from CFI - adjust wording significantly “Precedent transactions analysis is another form of relative valuation where you compare the company in question to other businesses that have recently been sold or acquired in the same industry. These transaction values include the take-over premium included in the price for which they were acquired.

The values represent the en bloc value of a business. They are useful for M&A transactions but can easily become stale-dated and no longer reflective of the current market as time passes. They are less commonly used than Comps or market trading multiples.”

Risk

Copied from sunbelt -adjust wording significantly “All cash flow comes with a degree of risk. Risk may be present in customer concentration, reliance on vendor relationships, macro economic trends, competitive forces, key employees, legal exposures and more. A formal business valuation will include an analysis of the company’s risk and quantify that risk into a percentage known as a Discount Rate or Capitalization Rate.”