WHAT IS YOUR BUSINESS WORTH ?
WHAT MUST BE ANALYZED AND DETERMINED:
1. Future discretionary cash flows considering:
net operating income | depreciation and amortization |
long and short-term interest expense | owners benefits including salaries and bonuses |
extraordinary expenses | capital expenditure requirements |
working capital requirements |
2. Determining valuation multiple considering:
business risk | growth opportunities | debt capacity |
competition | buyer market | employee skill level requirements |
customer base | owner involvement in the operations of the business | gross revenue levels |
economic dependence | age of business | extent of technology and research |
availability of vendor financing | profitability trend | proprietary products that are protected |
3. Asset or Share sale considering:
income tax impact | financial liabilities | net working capital | redundant assets |
4. Buyer synergies considering:
quantifying additional value to seller | negotiating additional value |
5. Terms of the deal considering:
vendor financing | guarantees and warranties | non-competition agreements | management contracts |
DETERMINING BUSINESS VALUE IS A SUBJECTIVE CONCEPT THAT UTILIZES BOTH REAL DATA AND PROFESSIONAL JUDGEMENT