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Now that you can calculate EBITDA correctly it is time to drill down into the difference between Adjusted EBITDA and EBITDA. Before we review this important distinction, I think it is important to explain the reason for using another benchmark for valuation. If you classify businesses as small, medium or large, breaking them up into […]
Read MoreNow that we have a good baseline Earnings number we need to look at Interest, Taxes, Depreciation, and Amortization. Interest Expense. The interest you can add back is all interest from debts and credit cards and consumer debts. It also can include finance charges. What interest does not include is bank fees, charges, or merchant […]
Read MoreThere is a lot of discussion in the M&A world about EBITDA and a wide variety of opinions about what is included and what is not included. Because of this, many advisors, sellers, and buyers are using an “adjusted” EBITDA figure for sales transactions. How do EBITDA and “adjusted” EBITDA differ? This is part 1 […]
Read MoreWorking Capital is defined simply as Current Assets Less Current Liabilities. Some advisors will include a certain amount of average inventory in Working Capital as well. Some advisors do not include Inventory in the Working Capital. Because of this it is important to define Working Capital as it pertains to each individual deal. Inventory can […]
Read MoreWhen determining the value of a business there are many terms which can be confusing. The term most often used if Fair Market Value and is defined as: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller […]
Read MoreWorking Capital When a business is sold, Working Capital (Cash, Accounts Receivable Inventory, and Accounts Payable) are usually included in the sale for businesses with a value over $1 million and not included for businesses worth less than $1 Million. When it is included, a “normal” amount of Working Capital is included, but the term […]
Read MoreA common sentiment among the business owners I meet is “my business drives me”. What I mean by that is who or what is really in charge of your business? Are you in charge of your business or does your business drive you? This is particularly true for a business owner who started the […]
Read MoreI came across this great article on Divestopedia about the pros and cons of having your accountant value your business. This is too good to not share. https://www.divestopedia.com/should-my-accountant-do-my-business-valuation/2/8199 There is value to having an independent 3rd party who has sold businesses value your business.
Read MoreTYPES OF BUYERS As a Seller of a business it is important to know the types of buyers you will encounter in the sales process. Selling a business successfully requires the help of a M&A advisor who “knows the ropes” and has dealt with each type of buyer. Financial – Financial buyers like to base their […]
Read MoreWhat are some top value drivers for a business? Here is a list to consider that will help increase the value of your business. Financial Performance When a financial buyer is contemplating a purchase, the number one metric they use to measure value is financial performance. It is important that the financial information being presented […]
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