Time to Sell? Setting a Price for Your Cash Business - Businessweek

 "Question: I have a four-year-old hair salon and would like to sell it. How do I set a price on this kind of cash business? Is it based on annual sales?

Answer: Small businesses typically sell based not on sales revenue but on a multiple of something called “seller’s discretionary earnings” (SDE), which is a calculation of the total financial benefit that the owner derives from the business each year.

That multiple can range from 1 times SDE to 4.5 times SDE, says Ron Hottes, president of Los Angeles business broker BusinessTeam. The exact figure will depend on how capital-intensive the business is and how dependent it is on its owner. In order to calculate your SDE, you’ll need your profit-and-loss statements and recent tax returns."

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.