About Business Valuations:
We have all heard the short cut methods that we are expected to use when valuing a business. There are statements like, “Values in our business are always six times the pretax net profit” or “values in this industry are always one times Gross sales. The problem with these “one size fits all” formulas is they are designed for a median price. That means, when you use them, half of the businesses will be lower and the other half will be higher. If you are selling and use this method, then you may sell for less than you should. If you are buying, then you may pay more than you should. This is not a good situation in either case. So what do you do?
Our Team has been dealing in the world of Private and Independent Businesses for many years. One of the first questions we are asked is, “What do you think my business is worth?”. If you look on the internet and search the various terms dealing with valuing a business, you will more than likely come away with more questions than answers. What we can tell you is that all of the information you see and read is both right and wrong. So what do we do? Let’s clear the air first.