Category

Business Valuation

18 Aug 2017

Business Valuation Multiples by Business Size and Industrial Sector
August 18, 2017• by • , , , , •

– Business Valuation Multiples by Industrial Sector – I recently read some very interesting information in an article from Pratt’s Stats.  The article contained charts showing business valuation multiples broken down by size of business, as a multiple of Net Sales, Seller’s Discretionary Earnings, and EBITDA – over the past 15 years.  And there are charts showing median valuation multiples per sales in 2016 for businesses in eight major industrial sectors, plus all industries as […]

18 Jul 2017

Earn Outs
July 18, 2017• by • , , , , , •

– A Portion of the Purchase Price for a Business, Paid in the Future, Based Upon Milestones Achieved – I recently read a very informative article, written by Doug Robbins, president of Robbinex, Inc., about Earn-outs. Doug, whose company specializes in the sale of mid-sized privately held businesses, addressed these four important topics related to Earn-outs: (i) What is a milestone [when used to determine an Earn-out]?, (ii) What part of the purchase price [is […]

14 Jun 2017

How Inventory Impacts Business Valuation
June 14, 2017• by • , , •

– An Explanation of Excess Inventory – Many business owners who are interested in selling their company often ask how the amount of their inventory impacts the value of their business.   Must business valuations for companies under $50M use market multiples of earnings [i.e. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or ODCF (Owners Discretionary Cash Flow)] to determine value. Both these valuation methods assume a “normal inventory” level is provided at closing. […]

09 May 2017

One Buyer = No Buyer [Part 2 of 2]
May 9, 2017• by • , , , , •

– Do You Want to Get the Best Deal or Just Save the Fee? – The ability to have multiple buyers compete for the acquisition of a business is in every business owner’s best interest. If you receive an unsolicited offer for your business, you may save a fee, but you have no idea if the offer is a good deal for you. A competitive bidding process (*) is the only way to ensure that […]

24 Feb 2017

Is Your Business Ready to Sell?
February 24, 2017• by • , , , , •

– 8 Tips to Improve the Marketability of Your Company – There is a well-known business adage that says “every company is for sale at the right price.” Whether you’re actively selling your business or just mildly interested, preparing your business for sale will help improve current efficiency and bottom-line profit by exposing ineffective processes and operational deficits.   To enhance the value of your business, it’s important to work every day to upgrade its […]

10 Feb 2017

Top 11 Mistakes Business Owners Make
February 10, 2017• by • , , , , , •

– Mistakes Business Owners Should Avoid – Two businesses can look identical, but have very different valuations. We look at 400 different qualitative aspects of the business, and provide a prioritized list of issues to make a better business. Here’s our own top 11 list of the most common mistakes business owners make:   1. They don’t have a business plan. Or, if they do, they waste time doing one, and then sticking it in […]

07 Dec 2016

Why You Need to Know the Value of Your Business
December 7, 2016• by • , , , •

Knowing Business Value is a Very Good Place to Start In today’s economy, no one wants to spend money on something they don’t need today. So why do you need an estimate of your company’s value when you don’t expect to leave for several or many years?   You may not — if you fall into one of two groups: Owners who are sure that their business exits are more than 10 years away. Owners […]

02 Oct 2016

How Your Balance Sheet Impacts Business Value
October 2, 2016• by • , , , , •

Your Business Valuation is Effected by Your Balance Sheet A balance sheet is one of the most common starting places for buyers when attempting to assess the value of your company. The following items that flow through your balance sheet may impact the value of your business more than you think. Business owners should consider the following aspects of their balance sheet when deciding to sell:   Capital Expenditures Most businesses would expect to see […]

05 Aug 2016

Questions Owners Often Ask about Selling their Business
August 5, 2016• by • , , , , , •

What Owners Want to Know About Selling Their Company   1. How much is my business worth? I’m uncomfortable with Mr. Schmerler’s answer: “…the price a Buyer offers you that you are willing to accept.” I feel a more complete explanation is: “A business is worth whatever the buyer, seller, and banker agree its worth. However, without significant extenuating circumstances, the maximum value is based upon the probability the business will produce a steady stream […]

08 Jun 2016

Value Drivers – besides just Cash Flow or EBIDTA
June 8, 2016• by • , , , , , •

Value Drivers Do you ever wonder why one business has buyers lined up willing to pay top dollar while another sits on the market for months, or even years? What do buyers look for in a prospective business acquisition? …The items, common to all industries, which drive up value, are called “Value Drivers.” They include:     • A stable, motivated management team     • Operating systems that improve sustainability of cash flows     • A solid, diversified customer […]