Valuing a business is intricate and complicated as every business is different and there are hundreds of variables which can impact the value. The best way for you to feel truly comfortable in which you received the best deal is to work with us from Valhalla Business Brokers. We have the resources to ensure several financially viable parties are bidding for your business.
As business brokers, we are often asked “how much can I sell my business for?” We would love to respond by saying as much as you want but this isn’t realistic.
The price is determined from a review of the profit and loss statements along with the matching balance sheets, thus leading us to a good indication of a “target price.” The target price is derived from EBIDTA (Earnings before Interest, Taxes, Depreciation and Amortization). The primary reason EBITDA multiples are used for valuation is they are easy to derive from financial statements of the current/past three years. Investors and buyers also use EBIDTA as an indicator to measure a business’s past financial performance and future potential.
The multiples can vary from 2 to a high in the 20’s depending on whether your business is a turn-key operation or you are in a niche market, i.e., you provide a service or product which very few other businesses have the ability to provide. The size and type of industry of your company, its profitability as well as its growth potential will have an impact on its EBITDA multiple.
Contact Us at Valhalla Business Brokers today to learn more.
As your business broker, we can determine the EBIDTA of your business as part of our conversation in getting to know you, your business and your goals.