There are a number of different methods that can be used to place an estimated value on a business. Different methods can yield different results. In fact, even the same method can yield varied results because different appraisers will make different assumptions.
In valuing Your business, our GLM’s Valuation used a modified version of the classic excess earnings method of valuation. We know from experience that this method offers a good estimate of value for small businesses.
In its simplest form, the method for excess earnings method of valuation makes use of the following items:
- Fair market value of the assets owned by the business less any debts owed by the business
- REAL income being earned by the owner(s) of the business (including items such as excess salary, profit, dividends, and business paid expenses that are not essential to business operations).
- An earnings multiplier- The methods used for calculating the real owner income and for the appropriate earnings multiplier are detailed within the report.
GLM’s Valuation uses the following elements in arriving at our estimate:
- 2019, 2020 and 2021 (and sometimes YTD 2022) profitability
- Company assets
- Type of business
- Business longevity
- Competitive environment
- Customer concentration
- Vendor concentration
- Geographic location
- Profitability trend
- Revenue trend
- Estimated value of plant and equipment owned by Your business
- Working-capital requirements
If you are interested in learn more about how much your business is worth, Contact us:
Schedule a 30 Minute Online Meeting: https://tomgosche-goglm.zohobookings.com/#/customer/30minuteonlinemeeting