Like any small business owner, you want to know how much your business is worth. Once you receive an estimate, the next question may be, “how was this calculated?” A multiple is a number you would use when calculating the value of a business.
Traditional banks are one source of financing when a small business owner is selling a business. But when you dig into the numbers, this is less true when the business is worth less than $3,000,000.
Seller’s Discretionary Earnings is also referred to as Seller’s Discretionary Cash Flow, Adjusted Cash Flow, Owner Benefit, Recast Earnings, or Normalized Earnings.
Ideally, as an owner, you want to ensure your business is not undervalued when the time comes to exit the business while a buyer doesn’t want to pay an inflated price. To achieve this, comparables are an excellent way to estimate the fair market value of your business.
What happens if you are struggling to sell your small business? What if a buyer is seeking some of your key assets but is not interested in the entire business? Maybe you need to expedite the process of transitioning out of the business?
Due diligence is the process where the buyer has an unveiled look at the business you’re selling to investigate it from the inside so that they can make an objective decision about your business, and make a buying decision or not.
No one expects it but unforeseen circumstances do happen and cause major disruptions to your ability to run a business. So if these situations happen, do you have a plan?
Exiting a small business will likely include preparing financial statements for potential buyers as well as obtaining a business or net asset valuation (ExitGuide Pro includes a valuation). If you need a refresher on some of the terminologies or you do not “speak finance” ExitGuide has summarized many key terms below in what we hope is a clear and practical explanation.
One of the first things that a prospective buyer will look at is the financial statements for your...
An asset purchase agreement is an alternative exit strategy for small business owners that do not want to sell their small business.