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Tag: Business Value

What Is My Business Worth?

What is your business worth? The short answer, of course, is whatever someone will pay for it. The longer answer is: it depends. It depends on your industry, it depends on your profitability. It depends on a multitude of factors. One of the valuation techniques being taught by the International Business Brokers Association is called the Multiple of Discretionary Earnings Method. It consists of 10 value drivers, each given a weighted score, that when combined estimates the multiple of earnings that a business would be valued at. These drivers include historical profitability, income risk, terms of sale, the business type, historical growth, location, marketability, desirability, competition and the industry....

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Steve Barnett, CPA, MBA, CBB, CBI

Steve Barnett has broad-based experience in small to middle market advisory activities.  Prior to becoming a Business Broker, he served as CFO, Controller and VP Finance of both Manufacturing and Professional Service Companies with expertise in the Aerospace, Consumer Products, Banking and Staffing Industries. Known as “The Valley Business Broker”, Steve serves Los Angeles and Ventura Counties.  Visit Steve’s website at  www.TheValleyBusinessBroker.com.

Increase Business Value Through Delegation

One of the key drivers of business value is the ability of a new owner to come in and build from where the old owner left off. Normally, the easier the transition, the higher the multiple of earnings the business values at. Everything else being equal, a business that can be run by management or even without owner involvement would have a higher multiple than, say, a single practitioner. For example, A business owner who does most everything himself may sell for a multiple of less than one times earnings, while an operation with a service staff and administrative support could sell for a multiple of 2 to 3 times earnings. This boils down to risk. The more reliant the business is on one person, the greater the risk. The more spread out the duties and responsibilities of running the business, the less the risk. Spread the work around to others, and increase business value through delegation....

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Steve Barnett, CPA, MBA, CBB, CBI

Steve Barnett has broad-based experience in small to middle market advisory activities.  Prior to becoming a Business Broker, he served as CFO, Controller and VP Finance of both Manufacturing and Professional Service Companies with expertise in the Aerospace, Consumer Products, Banking and Staffing Industries. Known as “The Valley Business Broker”, Steve serves Los Angeles and Ventura Counties.  Visit Steve’s website at  www.TheValleyBusinessBroker.com.