What is My Business Worth? Part 2

Transcript

Andy and Jessica welcome you to another episode of The Deal Board Podcast. This time, to resume the topic started on Episode 121, about business valuation. First, you need to have under consideration that a business can be valued in different ways, depending on the purpose, but if your objective is to sell it, then this is the right show for you. In today’s episode, Andy and Jessica are sharing the different approaches to valuating your small-to-medium business that you are considering selling.

Listing of the week: Michael Shea (Central Florida) is selling a manufacturing business that cuts designs for walls; they are making $1 million in sales. The owner is a 23-year-old who started this great online business. Cash flow: $333,000. Priced at $650,000. Call Michael at (321) 287-0349 or email him at [email protected].

Key Takeaways

[2:09] Why do you want to value your business?

[4:03] Andy talks about the right valuations in order to get financing.

[5:10] When do you need a certified valuation?

[6:55] Andy shares the definition of Fair Market Value.

[8:25] Jessica talks about the two earnings that should be looked at in valuations.

[10:39] The first approach to valuation: The Income Approach.

[13:36] The second approach to valuation: The Asset Approach.

[15:45] If your business is not making money, it doesn’t mean you can’t sell it.

[17:05] The Market Approach is the method for valuations that is used more often to sell small businesses.

[19:55] SDE multiples have increased over the years.

[21:08] Andy shares the statistics.

[23:06] Andy talks about other factors that can affect the valuation multiple, like location, supply, or labor issues.

[23:50] What does the current market look like?

[24:26] How was the market during COVID-19?

[25:09] It is still a strong seller’s market.

[27:28] Andy and Jessica talk about overpricing.

[28:50] Case studies and examples.

[33:41] Andy shares on the Rules of Thumb, which are highly used for valuations.

[36:10] Get some outside help!

[38:13] Deal of the week: Sam Curcio (New York) sold a high-end residential cleaning company. Revenue $3 million per year. SDE $700,000, Sold at $2.175 million. Impeccable books and records! The buyer was in the industry too.

[41:18] Listing of the week: Michael Shea (Central Florida) is selling a manufacturing business that cuts designs for walls; they are making $1 million in sales. The owner is a 23-year-old who started this great online business. Cash flow: $333,000. Priced at $650,000.

[44:39] The annual Andy’s family pasta dinner!

Call us — (888) 711-9018

Email us [email protected]

Call Sam Curcio at (646)640 9433 or email [email protected]

Call Michael Shea at (321) 287-0349 or email [email protected]

Tweetables

“The different purposes for business valuation could affect the value, the methodology, and even the kind of documentation required.” #thedealboard #transworldbusinessadvisors #valuation

“Businesses that sell are priced correctly.” #thedealboard #transworldbusinessadvisors #valuation

“It is still a strong seller’s market and it will continue this way the rest of 2022.” #thedealboard #transworldbusinessadvisors #sellingbusinesses #valuation

Mentioned in This Episode

• The Deal Board Podcast
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• The Deal Board on LinkedIn
• Transworld Business Advisors
• Transworld Business Advisors on LinkedIn
• United Franchise Group
• Listen to Ep. 121: What is My Business Worth? Part 1