Читать книгу Small Business for Dummies - Veechi Curtis - Страница 71

When you know what the Adjusted EBITDA of a potential business is (refer to the previous section to refresh your memory on how to calculate EBITDA), you’re ready to calculate how much moolah this business opportunity is really worth.

The times earnings method is based on the idea that you multiply the Adjusted EBITDA by a times earnings multiplier to arrive at an overall valuation of goodwill. (If a business has debtors, equipment, furnishings or inventory, you add the agreed value of these assets to this goodwill figure.) Typical multipliers can range from two to six times Adjusted EBITDA. For example, if a business had an Adjusted EBITDA of $100,000 and your accountant recommends a multiplier of four, the total value of goodwill for the business would be $400,000. So, the price for the business would be $400,000, plus the value attributed to debtors, equipment, furnishings or inventory.

Although I can’t advise you as to what multiplier is typical to your industry, here are some rough-and-ready guidelines for EBIT multipliers:

 Listed companies typically sell for a higher multiplier than private companies, and can even sell for up to ten times EBIT.

 If a business is suffering downwards sales trends, selling in a rush or operating without a secure lease, it may sell for as low as one or two times EBIT.

 An asking price anywhere between two and six times EBIT is reasonable for a private business.

 A service business that relies heavily on an owner’s specialist skills may receive a lower EBIT, due to the fact that the owner’s skills are hard to replicate.

 If the profitability of a business is growing, and the owner can prove sustained growth trends, the owner may well ask for a higher EBIT.

If your accountant lacks experience in valuing businesses, I suggest you seek the services of a business valuation expert.