What Is My Business Worth?

After thorough deliberation, you’ve decided that it’s time to sell your business. The first step is to determine the value of your business. 

No simple formula exists to determine the exact value of your business since many factors going into the evaluation are subjective. However, in this article, we will outline a few valuation methods that work for most businesses.

Evaluate Your Assets

To determine a fair market value for your business, you need to compile a list of your assets. Your valuation can be based on the book value of an asset, its original cost, or its current appraised value. This type of valuation takes into account the unique features of your business.

Compare to Market Data

A market comparison may be a more conclusive method for determining the value of your business. You will want to identify similar businesses that have recently sold in your area. Using a system of ratios, you can determine a ballpark selling price. The ratios involved in this method include ratios of sales price to annual net profits, discretionary cash flow, and annual revenues. 

Look at Your Income

The third type of valuation is possibly the most popular because it is based on income. This valuation method identifies your predicted future cash flow and earnings evaluations. Based on an actual revenue stream, this method offers a price that a buyer will likely be willing to pay for your business. 

Menlo Business Brokerage firmly believes that every business owner deserves fair compensation for the hard work that went into building their companies. Our Menlo Certified Valuation Analysts™ utilize a variety of valuation techniques and will work with you to secure the best price for your business. Contact us today to start the appraisal process.