How Do You Value A Small Business? | Dallas/Fort-Worth Business Brokers

We help businesses that are currently generating between $500,000 - $50,000,000 topline revenue.

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The final sale price of a businesses is influenced by a variety of factors, including revenues, business category, location, cash flow multiples and asking price. Many describe business valuation as an Art and a Science. At Valhalla Business Brokers, we also consider many additional factors which add to the value of a business.

We are often asked about how we value a business. We begin by asking for a few documents to get us started. We ask business owners to provide their Profit and Loss (P&L) statements for the past three full-years and the current year, as well. With corresponding Balance Sheets, we derive what we refer to as EBIDTA – Earnings before Interest, Depreciation, Taxes and Amortization. This figure can possibly include the owner’s salary and numerous personal expenses which is a part of owner’s cash flow and is typically an “add-back.”

An accurate EBITDA allows us to compare your company to other companies across a broad spectrum but on a similar scale. With many the differences in each organization along with the differences in industries, we try to achieve uniformity in deriving net profit or EBITDA for comparison purposes. EBIDTA is commonly used with small to medium enterprises (SMEs) as a starting point to find the “right” listing price. It is also an indicator of how a business handles its operations from a financial standpoint.

“Owner add-backs” is the term for owner expenses which are part of the P&L statement which brokers add to the owner’s cash flow. Unfortunately for some owners, lenders will often negate these addbacks because they believe new owners will have the same costs in running the business. This is an example of how important it is to get your P&L cleaned up and ready for you to sell your company. Examples of this include the owner’s car used in the business and business trips where the owner’s family travels to and from with the business owner.

Leisure activities such as hunting or fishing are considered an “add-back,” including salaries of family members on the payroll even if they are in non-essential or less-essential positions. As brokers, we will use these expenses to show prospective buyers what the business owner is spending outside of the business that is part of the discretionary earnings. EBIDTA is not a definitive indicator of a price-point, but it is certainly near the ballpark of the eventual valuation of a business.

There are many ways to value a business. Professional valuations companies use, Multiples of EBITDA, and/or Discretionary Earnings, Discounted Cash Flow, Comparative Transactions, Capitalized Excess Earning. All these methods also take into considerations the value of the real estate and most important input from the owner. The art of a valuation lies in the ability to apply these tools in the most effective manner, utilizing professional judgment. This type of insight is gained over years of experience selling many different types of companies and managing multiple types of transactions.

Most important, it also calls for a deep understanding of the business and the primary stakeholders’ requirements and expectations. We genuinely want to be able to get the owner of a business what he wants but we also have a strong understanding of the market will pay. It’s a waste of everyone’s time to overprice a business and it’s a waste of the seller’s money to underprice a business. Our goal is to find the strike zone where we will get the most buyer interest and meet all the financing requirements from most banking institutions.

Why Us?

20+

Years of Experience
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Board of Advisors
Get Highest Market Value

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    Our Process

    1

    Goals & Discovery Meeting

    During our first initial meeting, we want to get to know you and discover what are your goals and what brings you to us.

    2

    Valuation

    We will need to see your financials, tax returns etc to get an accurate valuation on your company.

    3

    Listing Agreement

    In our listing agreement, we will formalize your goals to sale and layout all the terms. We understand this is a big decision and will be here with you all the way.

    4

    Finalize Marketing Files

    Once the listing agreement is signed we will begin to build a marketing package.

    5

    Going to Market and Fielding offers

    After we have finished the marketing files, its time for us to reach out to all our partners and the market place to find potential buyers.

    6

    Field Offers

    Our goal is to bring more than one offer to the table for you to choose from.

    7

    Due Diligence

    Once an offer has been made and accepted we will enter into the due diligence phase where we will fine-tune the offer and work closely with the buyers to develop the purchase agreement.

    8

    Close the Transaction

    During this phase we will be working very closely with the banks, buyers, sellers, and lawyers to ensure everyone has all the documents and information need to close.

    How We
    Do It

    Supercharge your business to maximize marketplace value

    • Diving deep into your business goals
    • Identifying areas for improvement to sell your business for top dollar
    • Equipping your company with the best professional partners to increase enterprise value

    Our Mission

    At Valhalla Business Brokers, our mission is to offer professional expertise and reliable service to our clients in the areas of Buying and Selling privately held businesses, Mergers and Acquisitions, affiliated Financial Support Services, including Loans, imaginative methods of Raising Capital and Cash Flow, Tax Reduction Strategies and related Real Estate services. We assist both sellers in preparing and packaging their business for marketing as well as buyers looking for a specific acquisition or merger. Our company is a fully licensed Real Estate and Business Brokerage operation with only trained professionals. Our team of expert M&A Advisers and Certified Business Brokers will help inspire, educate, and consummate a deal on their behalf.

    We are the broker of choice for North Texas and the surrounding areas. We will uphold the highest ethical standards, provide superior customer service, and continually strive to meet our clients’ professional objectives. Additionally, we commit to working with the utmost confidentiality with buyers, sellers, and their accountants, lawyers and other business partners. We understand that buying or selling a business is a deeply personal, often emotional experience and we focus on providing sincere, pragmatic advice.

    We Pledge To

    Outwork the Competition

    Negotiate Like Sharks

    Never Stop Until the Deal Is Done

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    Schedule a free consultation and learn how to sell your business for maximum value today!






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