Whether or not they are thinking about selling, all business owners should know what their companies are worth. They should also be thinking about an exit strategy. We can help business owners with the mechanics and strategies of buying, selling and valuing their businesses.

Many owners have no idea. Selling a business is both art and science, and in no other area is this more evident than the valuation. While every seller wants to achieve maximum value, setting an asking price that is too high signals to buyers that you may not be serious about selling.  On the othr hand, setting a price to low will scare away the sellers.

While there are a number of methods used to value a business, the most common formula for smaller transactions is a multiple of seller’s discretionary earnings (S.D.E.). This type of market-based valuation involves recasting profit-and-loss statements — adding back owner’s salary, perks and nonrecurring expenses — to find the S.D.E. of the business and then using comparable data for similar businesses to arrive at an appropriate multiple.