How Can I Value My Small Business?
There are a few ways to value a business: Asset Value: Calculate the value of all of the assets and arrive at a price for assets only. Discounted inventory value: Assess the current value of inventory and discount it for quick sale. Income Value (most common): The adjusted net income (net profit + owner benefit (EBITDA) + value drivers) of a business is subject to an industry standard multiple to arrive at a selling price. This price includes the assets and inventory needed to run the business. Determine which method is best for your business: Asset values do not work for all businesses. You may have some underperforming assets that don’t bring much value to the business and you may have an asset (like a license) that brings a lot of value to the business. So you will need to take all the assets into consideration and arrive at a fair value. Discounted inventory is simply discounting the amount you paid for inventory to see it quickly. If the business is clos...