I have thrifted the article to its key points. To read the entire article, click the link at the end of the summary - Eric Gall.
By Chance Butler, Pacific Landfall - July 28, 2017
How much is your business worth? There are three ways to estimate its value on the open market:
Some industries have standard models for determining value, e.g, accounting practices one times annual revenue. Most industries do not and must rely on other approaches.
- Income Approach - The business is viewed as an investment. Focus is on future cash flows and growth. Method used is called the Discounted Cash Flow (DCF) approach looking at 5 to 10 years of income.
- Market Approach - Your business is compared to the sales price of other businesses based on multiples of Discretionary Earnings (DE) and Revenue.
- Asset Approach - If your business isn't generating enough DE to support a working owner and provide a solid return on investment, the business is worth no more than the value of your company’s assets.
Understanding the methods and value of your business can help identify the best time for you to sell.
For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall, CBI, CM&AP at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com. To search for Florida Businesses for Sale: CLICK HERE
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