Free Broker Opinion of Value For Qualified Sellers In Orange County
M&A and Business Broker activity is very high due to a number of reasons. The revenues and profits for most business have increased and therefore the valuation for these businesses has moved upward. Business owners who put off selling their business due to the “great recession†are now contemplating a sale. Another, even more significant trend, is the Baby Boomer generation who want to retire. It is estimated of the approximately 700,000 Baby Boomers, about 12 million own privately held businesses. These 12 million businesses are likely to change hands over the next 10-15 years.
Before a business owner, whether a Baby Boomer or not, sells the business, he or she needs to get an estimate of what the business will bring on the open market. A formal Valuation can cost between $5,000 and $10,000 depending on the size and complexity of the business. If a seller wants to know if his perception of the value of his business, he should either do a formal Valuation or ask a Broker to do a Broker Opinion of Value.
Before putting a business on the market, a seller (or a buyer) should get an idea of the worth of the business. There are several ways to value a business but most are based upon the re-cast cash flow of the business. One way is to value by “rule of thumbâ€Â which is a shortcut analysis of a business’s value, usually expressed as a multiple of the annual re-cast earnings of the business or Seller’s Discretionary Earnings (SDE). In general, a small business with a full-time working owner is worth from 1 to 3 times its annual SDE, with businesses producing SDE under $50,000 falling closer to the “1x†and businesses producing SDE of $100,000 or more valued closer to the “3x.â€Â The value must be tempered by the risk assessment which can either increase or decrease the valuation. Another way to value a business is to compare the cash flow of the business to the sales price of other businesses that have sold. This market comparison approach will reveal the multiples of SDE on past business that have been sold which can then be applied to the business being sold. A good Broker will have sources to access to these “compsâ€. The market comparison approach is more likely to yield a more accurate valuation.
Empire Business Solutions is offering a Free Broker Opinion of Value to all qualified business owners. Empire believes you should have an estimate of the value of your business BEFORE you make the decision to sell. Call us at 714-374-6430 to discuss the details.
Empire Business Solutions has been a leading Business Broker and M&A Specialist since 2005 in the Orange County and Los Angeles County area. Empire specializes in representing sellers in Southern California who want to maximize the value of their business.
