WHAT IS YOUR BUSINESS WORTH ?
WHAT MUST BE ANALYZED AND DETERMINED:
1. Future discretionary cash flows considering:
| net operating income | depreciation and amortization |
| long and short-term interest expense | owners benefits including salaries and bonuses |
| extraordinary expenses | capital expenditure requirements |
| working capital requirements |
2. Determining valuation multiple considering:
| business risk | growth opportunities | debt capacity |
| competition | buyer market | employee skill level requirements |
| customer base | owner involvement in the operations of the business | gross revenue levels |
| economic dependence | age of business | extent of technology and research |
| availability of vendor financing | profitability trend | proprietary products that are protected |
3. Asset or Share sale considering:
| income tax impact | financial liabilities | net working capital | redundant assets |
4. Buyer synergies considering:
| quantifying additional value to seller | negotiating additional value |
5. Terms of the deal considering:
| vendor financing | guarantees and warranties | non-competition agreements | management contracts |
DETERMINING BUSINESS VALUE IS A SUBJECTIVE CONCEPT THAT UTILIZES BOTH REAL DATA AND PROFESSIONAL JUDGEMENT