What is your business really worth? Most owners may have an idea but don’t really know the answer to this critical question. Every business owner should ask this question and know the real answer, either as part of planning your exit strategy or preparation for starting the sales process. Unfortunately many owners wait until a crisis of some sort exists to value their business, when knowing the value of their business on a timely basis would help significantly with exit planning and avoiding crisis management.
Key steps in the valuation process, providing a Broker Opinion of Value, include gaining an understanding of the operations of the business as well as completing a financial review of trends in sales, income, and expenses, and calculating Seller’s Discretionary Earnings, or SDE, the cash flow available to a new owner to support the business. Not only revenue but how much cash flow is available to a new owner for employment compensation, investment in growth, lease or mortgage payments, and principal and interest payments are of course crucial elements in the valuation process. Multiples of revenue and SDE combined with special considerations for the business are used to determine the real market value of the business. Many owners overestimate the value of their business — often they have grown the business from its initial founding and therefore have a strong attachment to the business — so a detailed review and explanation of the Broker Opinion of Value is a must.
Oak Capital Advisors is pleased to have been selected by multiple business owners to provide a Broker Opinion of Value. Our business and M&A experience, small business ownership background, and multiple industry knowledge combine to mean that you or your client will get a realistic estimate of value. Choose Oak Capital Advisors to provide your Broker Opinion of Value.