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How to value my shares in a small company to ask for a buyout of my 33%

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Answers (4)
William A. Price
Business Lawyer
DuPage County, IL

One additional suggestion on valuation: You are selling a minority interest in the company, but most state entity statutes and cases will let you resist any forced sale at less than a value which reflects your percentage ownership of the business as a going concern, not a value with "minority interest" or "marketability" discounts. A good general valuation guideline for companies sold to private parties is three to five times the entity's earnings before income taxation, depreciation, and amortization (EBITDA), though regional and industry-specific comparable sales data and "rules of thumb" for sales may give you more specific guidance on what you could expect on sale. Banks, for instance, sell for some proportion of book value of assets.

BTW, try to be sure that whoever does the valuation is appropriately certified, and works as a "neutral", or for you, not just for entity management.

Hope this helps,

Bill Price

Mar 26, 2013
Clarence S. Day III
Griffin Moor International, LLP
Managing Partner
Prince Georges County, MD

I agree with Don,

Making the common error of a weak valuation can become costly and lead to problems greater than you suspect. A complete and court defendable valuation will cost you several thousand dollars, however it is reliable. You should reasonably educate yourself on valuation methods so that you can compare intelligently the value offered by the practitioner. If you require a referral, I will be happy to provide you one in our database.

Mar 18, 2013
Jerry Parker
Parker Investments
Wake County, NC

Value the whole company first. If you had some recent sales of similar type companies you could determine a valuation multiple. Then if you determine what you think the average net maintainable profit for the next 2-3 years would be. That is after adding back interest, depreciation, and amortization...and any personal, or one off expenses the business had....don't include any real estate. Take the earnings multiple and multiply by the average net profit you think the company will make over the next three. That's a valuation based on the company's income. The you would divide by 3 tho get the 33%. If there is a
lot of expensive plat & equipment...mark it up , if the business is barely hanging on, you might mark it down a little.

Mar 17, 2013
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The BAF Group LLC

Get a Valuation expert. It is going to cost plenty, but you need the certainty that you are providing an expert, objective valuation, so you do not risk being sued, later.

Mar 8, 2013