What Is Your Business Worth?
So many aspects must be considered in determining an indication of market value for your company. The quick answer to the question of ‘what is your business worth?’ is ‘we do not know, yet.’ As a business owner, you’ll inevitably hear about multiples of earnings, percentages of Gross revenue, asset value, liquidation value, discounted value of future cash flows (capitalization), comparables and a variety of other rules of thumbs as methods for determining the value of a company. You’ll have neighbors, fellow business owners, your cpa and attorney all giving you their advice and expertise on the topic, though none are experts in valuing or selling companies.
The reality is no one can tell you the value of your business until they’ve a) performed a thorough examination of the business and its financials, b) interviewed the owner, c) created a Confidential Business Review and most importantly d) taken it to the marketplace. By in large the market determines the value, as a business is only worth what a ready, willing and able buyer will pay for it.
This is where The George Ryan Group comes in. The founders and principals of the firm, Chris & Les Wozniak, are Merger & Acquisition Master Intermediaries (two of only approximately 80 M&AMIs in the United States) and Certified Business Intermediaries, and therefore experts in the sale of lower cap to middle market companies. Our main goal is to maximize your sales price and net proceeds at closing. When working with your company, we thoroughly review the financials, and determine what money is available to a new owner. We are able to not only find discretionary items within seller’s financials, but we are able to find other adjustments in the financials such as inefficiencies in COGs, payroll, and SGA expenses based on industry averages.
Further, the type of buyer we invite to review your company also determines the type of price they will pay. Comparitively speaking, individual buyers (typically high net worth individuals or small groups of them), family offices, PEGs, and corporate buyers will all value the same company differently. None are right or wrong, it’s just their specific standpoint. We have large databases of all the above types of buyers that we have built over the years.
Valuation is very much a combination of science and art. We’ve represented two companies in the same industry; For instance, consider you have company A with revenue of $10,000,000 and adjusted EBITDA of $2,250,000 and company B with revenue of $7,500,000 and adjusted EBITDA of $1,650,000. Each company was in the same geographic location, similar facilities, similar equipment, etc. Similar across the board…seemingly. Looking at each company in a vacuum, and applying some type of rule of thumb, you could determine a “value” for each. Which business should sell for more? Your answer is probably Company A. Why? All things equal, it has a higher adjusted EBITDA. It makes more money. Which business sold for more? Company B.
Though these two companies had so much in common, Company A had two customers that made up 85% of their revenue, whereas Company B had little customer concentration. The point is not that customer concentration can be a factor in valuation or selling a company. The point is there are numerous aspects to consider in determining a company’s value, and those aspects first have to be uncovered and discussed before the valuation process can truly begin.
We have a very straight forward methodology for stepping you through the selling process. We’ve developed this process from a combined 37 years of M&A and Intermediary experience. It’s done succinctly, with Confidentiality practiced from start to finish. Call us at 214-682-8562 or email us at les@thegeorgeryangroup.com so we may begin the process of helping you sell your company.
The reality is no one can tell you the value of your business until they’ve a) performed a thorough examination of the business and its financials, b) interviewed the owner, c) created a Confidential Business Review and most importantly d) taken it to the marketplace. By in large the market determines the value, as a business is only worth what a ready, willing and able buyer will pay for it.
This is where The George Ryan Group comes in. The founders and principals of the firm, Chris & Les Wozniak, are Merger & Acquisition Master Intermediaries (two of only approximately 80 M&AMIs in the United States) and Certified Business Intermediaries, and therefore experts in the sale of lower cap to middle market companies. Our main goal is to maximize your sales price and net proceeds at closing. When working with your company, we thoroughly review the financials, and determine what money is available to a new owner. We are able to not only find discretionary items within seller’s financials, but we are able to find other adjustments in the financials such as inefficiencies in COGs, payroll, and SGA expenses based on industry averages.
Further, the type of buyer we invite to review your company also determines the type of price they will pay. Comparitively speaking, individual buyers (typically high net worth individuals or small groups of them), family offices, PEGs, and corporate buyers will all value the same company differently. None are right or wrong, it’s just their specific standpoint. We have large databases of all the above types of buyers that we have built over the years.
Valuation is very much a combination of science and art. We’ve represented two companies in the same industry; For instance, consider you have company A with revenue of $10,000,000 and adjusted EBITDA of $2,250,000 and company B with revenue of $7,500,000 and adjusted EBITDA of $1,650,000. Each company was in the same geographic location, similar facilities, similar equipment, etc. Similar across the board…seemingly. Looking at each company in a vacuum, and applying some type of rule of thumb, you could determine a “value” for each. Which business should sell for more? Your answer is probably Company A. Why? All things equal, it has a higher adjusted EBITDA. It makes more money. Which business sold for more? Company B.
Though these two companies had so much in common, Company A had two customers that made up 85% of their revenue, whereas Company B had little customer concentration. The point is not that customer concentration can be a factor in valuation or selling a company. The point is there are numerous aspects to consider in determining a company’s value, and those aspects first have to be uncovered and discussed before the valuation process can truly begin.
We have a very straight forward methodology for stepping you through the selling process. We’ve developed this process from a combined 37 years of M&A and Intermediary experience. It’s done succinctly, with Confidentiality practiced from start to finish. Call us at 214-682-8562 or email us at les@thegeorgeryangroup.com so we may begin the process of helping you sell your company.