on business valuation?

I own a small business and need some advise on valuation. Is there an easy formula or do I have to spend a lot of money to have someone do it for me?

Business is 54 year old florist. We have a great business, yearly gross sales of one million.

Owner is getting very tired.

5 Answers

  • 8 years ago
    Favorite Answer

    Asset valuation: This method appraises the value of a company's assets as the sum of all fixed assets and equipment, improvements to the physical plant, inventory and owner benefit (the owner's discretionary cash for one year). Asset valuation is most often used in asset-heavy industries such as retail and manufacturing.

    Market valuation: Remember when you bought your home and your real estate agent showed you "comps" -- comparisons of what similar homes in your neighborhood sold for recently? This method takes a similar approach for businesses by using industry-average sales figures as a multiplier. But just as housing "comps" overlook the very real differences in properties, the multiplier approach may overstate or understate the true value of your business. For example, it is not unusual today for Internet businesses to sell for 50 times their estimated gross, even though they have yet to make a dime.

    Capitalization of income: This method focuses exclusively on cash flow and return on investment (ROI), taking into account important intangibles such as work force and management, turn rates, industry trends, sales projections, and the market position and maturity of the business. The end result is a multiple of earnings, based upon the buyer's desired rate of return. It indicates a likely market price and the time frame in which the new owner might expect to recoup his investment.

    Owner benefit valuation: Most often used for businesses whose primary value comes from their ability to generate cash flow, this formula takes the owner benefit (the seller's discretionary cash for one year) and multiplies it by 2.2727 to achieve a market value. The multiplier is based on a 10 percent ROI, a living wage of 30 percent of owner benefit and 25 percent debt service.

  • Anonymous
    7 years ago

    A fairness opinion on a transaction is to satisfy regulatory requirements or corporate governance concerns

    Independent and objective advice, to determine the right price to pay or accept for a business

    Valuations of unlisted companies, businesses, shareholdings, goodwill, know-how, brands and other intangible assets

    Advice for Joint Ventures / Alliances on equity splits at formation or exit in an independent or advocate role

    Support for litigation or arbitration, particularly expert witness and adjudication work in business valuation disputes

    Valuation opinions for unquoted debt or equity instruments

  • Don't use a multiple like many accountants will. The absolute best way is to preform a Discount Cash Flow Analysis.

    I do them for about $500 for small business as long as you have good accounting records


  • 6 years ago

    You can get started with a simple valuation tool that is on-line. That gives you the first estimate. Do dig deeper, you may want to hire a broker.


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  • 4 years ago

    The below pronounced formulation is a particularly common for inventory/company valuation: P = (frac{E*G}{ok^2}) + (frac{D}{ok}) In a definite case the place ok is comparable to 10%, and the corporate does not pay dividends, SPM reduces to the PEG ratio. for added documents, you're able to flow to here website, i'm hoping you would be waiting to unravel your issues

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