How Do I Value My Business?

Transcript

Andy and Jessica welcome you to another episode of The Deal Board Podcast. This week, they are discussing a recurrent and always important topic: valuation. Reaching an accurate value for their business is the primary concern of many business owners, and is a crucial element to consider while thinking about exiting a business.

In this conversation, Andy and Jessica dive deep into add-backs and share their expert advice to use them favorably for your valuation process.

Listing of the week: Aaron Wills is selling an HVAC company that has been in business for more than two decades The real estate is owned by the business and it has two income-producing properties. The asking price is $800,000 for the business and the real estate is just over $1 million. Call Aaron (817)725-7221 or email [email protected].

Key Takeaways

[1:25] How much money does your business make?
[1:47] Jessica discusses the two earning amounts you should consider while starting a valuation: EBITDA and SDE.
[3:10] Different ways of minimizing your earnings to pay less taxes.
[4:18] Transworld’s philosophy is a little conservative, and Jessica and Andy explain why.
[7:31] Things that, by definition, are add-backs: The first one is INTEREST.
[8:04] TAXES
[9:12] APPRECIATION/AMORTIZATION
[10:36] OFFICER SALARY (one)
[11:11] W2 SALARY
[11:40] OWNER PERKS
[13:52] TELEPHONE and CELL PHONE EXPENSES
[15:32] REAL ESTATE
[19:34] PAYROLL
[20:40] DONATIONS
[21:32] DUES and SUBSCRIPTIONS
[22:45] BAD DEBT
[23:40] ONE-TIME NON-RECURRING EXPENSES
[24:51] LOSING or ADDING A BIG CUSTOMER
[25:42] EQUIPMENT LEASES
[26:07] PENALTIES
[26:34] Check large numbers!
[27:15] Jessica discusses adding personal expenses.
[33:30] Deal of the week: Daren Bucklin (Portland) sold a vocational school that has been in business since 2008, training front-line caregivers. The company was sold to a large University looking forward to expanding, for $900,000.
[35:26] Listing of the week: Aaron Wills is selling an HBAC company that has been in business for more than two decades The real estate is owned by the business and it has two income-producing properties. The asking price is $800,000 for the business and the real estate is just over $1 million.

Mentioned in this Episode:

Call us — (888) 719-9098
Email us [email protected]

Call Daren Bucklin at (503) 820-0063 or email [email protected].
Call Aaron Wills at (817) 725-7221 or email [email protected].

Tweetables:
“We need to know what a business makes in order to value it properly.“ #thedealboard #transworldbusinessadvisors #addbacks #valuation

“Ask yourself while considering an add-back: Is it significant? Can you prove it? Is it worth it?” #thedealboard #transworldbusinessadvisors #addbacks #valuation

Mentioned in This Episode

• The Deal Board Podcast
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• Transworld Business Advisors
• Transworld Business Advisors on LinkedIn
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• United Franchise Group