Article Summary: 6 Things You Probably Don't Know About Your Company Value | PR Newswire

I've summarized this article capturing only the key points.  If you would like to read the article in its entirety, click on the link at the bottom of my summary.  Edison Avenue offers complimentary opinions of value and more formal valuation opinions at reasonable prices -- Eric Gall.

BELLEVUE, Wash., June 2, 2016 /PRNewswire 

Most small business owners have unrealistic ideas of how much their business is worth. 

The sale of big companies and their reported valuations have very little to do with the value of small, privately held businesses.  Here are 6 business valuation facts surprising to most small business owners:

 
 
 

Aaron Muller, founder

1. Small businesses usually don't sell for a multiple of their revenues. Buyers are most often individuals who need to make sure the business generates profit to pay their bills. Profits matter more to the business valuation than revenues.

2. Growth potential doesn't increase the value much. Buyers primarily value the business on its past profitability.

3. Value doesn't go up because the business was established a long time. Having too short of a history can harm the value, but a company in business 50 years is not automatically more valuable than one in business 10 years.

4. Most recent year's performance trumps historical performance. A profitable business for many years experiencing a bad year last year will be dramatically discounted. A business performing poorly for many years experiencing a great year last year will see a dramatic increase in value.

5. The buyers don't pay extra for equipment. The company equipment is stuff one needs to run the business. A lot of expensive equipment does not necessarily increase the business valuation.

6. It takes time to translate a business valuation from paper to cash. The average time to sell a business is 9 to 12 months. The larger the business, the longer it takes to sell,

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.