How Much is My Company Worth?

The most common question we get is how much is my company worth? In businesses doing $10M/yr or less in revenue the basic answer is simple. 1-4x EBITDA. If you are just starting your research on selling your business and are not familiar with that term, here's how to figure it out.

On your P&L:

Revenue

- COGS

= Gross Profit

- Overhead (SG&A)

Add Back Interest

Add Back Depreciation & Amortization

= EBITDA

Now, there are a couple more potential additions we can make in order to help our valuation. We can add back your salary, auto expenses, insurance, meals & entertainment if any or all of those expenses will disappear with a new owner. Add any of those that are applicable to the EBITDA number from above.

Last item. If the buyer will need to hire a GM, CEO, Chief Cat Herder, etc, you'll need to deduct a market appropriate salary for that from the equation.

Now you have the ADJUSTED EBITDA to use for the multiple evaluation of your business. We'll be looking at the average of the last 3 years ADJUSTED EBITDA.

Next question is how do I know what multiple to use? Well, that's a longer answer but the short version is the less your company depends on you to operate every day, the higher the multiple. We most often see 2,3x multiples.

We'd be happy to give you a complementary evaluation of your business. Click Here