Navigating Opportunity and Unlocking Value
When discussing value, there can be a wide range, in this post, I share my thoughts on business valuation. Valuation, in its simplest form, is a function of risk and cash flows.
How do you know if your business is operating optimally? A comparison of budget to actual results can provide insight. A comparison to the prior year or prior month can also tell a story.
You’ve heard the line, “When the time is right, will you be ready?” As a business owner, maximizing the sales price of your company may be the most important process that you undertake.
In its most simplistic form, value is a function of risk and cash flows. Higher risk factors translate into lower enterprise value. Therefore, you are able to maximize value by reducing risk.
You’ve worked hard to build your business and now it’s time to let go. You’ve heard anecdotally that your business should sell between 1.5 to 2.0 times revenues. You start getting excited about enjoying retirement.
Do you know how buyers value your business? Often they use a shortcut approach and apply a multiple to a metric, such as revenues or EBITDA, also known as Earnings Before Interest, Taxes, Depreciation and Amortization.