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What is the best way to value your business and how is the best way to sell it?

What kind of formula would be widely accepted in valuing your business?

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Answers (3)
Julie A. Barnes, CPA
Small Business Exchange, Inc.
Travis County, TX

Hi David - that IS the $64,000 question! As a business broker and CPA, I really don't enjoy providing vague answers but it really DOES depend on the situation. Please visit my blog (see below) to read about some of the conclusions I've reached while working in the industry. In spite of all the formulaic valuation models out there - it is far from an exact science. That doesn't mean, however, that you can't assign a reasonable value to your business with the proper research and deliberation.

Good Luck!
Julie A. Barnes, CPA
Small Business Exchange Inc.
Austin, Texas

May 16, 2009
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For valuation - check out other similar businesses on BizBuySell and other listing services. Obviously you must be an "apples to apple" comparison when it comes to cash flow (EBITDA, size, # owners/family involved, assets involved [real estate], nature of the sales [stock or asset], consistency of sales/earnings/etc. Here's a very, very rough range....for, say EBITDA < $350k......use a multiplier of 2x to 5x EBITDA, where 2x is very low (it will sell very quick) and 5x is high (after taxes at 5x, adjustment for risk, I'd rather invest in high dividend paying stock).

May 15, 2009
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The BAF Group LLC

That's a very complex question. As a Broker, I would normally say the best way to sell it is through a Broker. But where you are located, it may be a slightly different situation. Sometimes, the best way to sell is privately, to a competitor. In the Printing Industry, that is sometimes the case. The sale, in that situation, is not really a function of selling all of the assets, depending upon your type of printing, what else you might be selling and the kind and nature of the equipment you have; you may simply be selling the Client list, and that depends upon the type of business you have and the nature of your relationship with your Clients. It is not an easy question, which again brings us back to a Business Broker who, if he is with his weight, will be able to counsel on all of these issues. I am not certain whether I helped or confused you, but as I said from the beginning, it is a complex question.

May 13, 2009

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