Is it as easy as Google or one of your friends told you it is? Did you apply a multiple, probably somewhere between 3-5, to your EBITDA?
A thorough, reliable process formulaic inclusion of concepts and data inputs that can include Net Income, Revenues, Cash Flows, EBITDA, risk and risk concentrations, Cost of Capital, returns and the time value of money, just to name a few. As you work your way through the process with a pro, consider what resources you will be using for:
- Determining the Standard and Premise of Value
- Sources of Information for:
- Resources to determine the cost of capital
- Regional and National Economic Data
- Comparable Business Sales
Are your financial statements:
- Compliant with Generally Accepted Accounting Principles (GAAP) and/or International Financial Reporting Standards (IFRS)?
- Translatable to industry standards?
- Reconciled easily to tax returns and actual bank statements?
- Inclusive of a robust, realistic forecast?
Margins and Key Metrics Important to Your Industry
If key metrics such as your Gross Profit are less than industry standards or your competitors, you might not be operating as efficiently as you could be. Take off a chunk from that price tag over which you began salivating last week. Perhaps you’re margins and other key metrics are better – there’s potentially some premium there and possibly an increase in price.