As a Business Broker, I’d hear this question all the time: “How would I know what my business is worth if I wanted to sell it?” Many times, getting an idea of what this figure is, will help a seller decide if he/she wishes to move forward with exploring the process of selling their business….or not.
- Figure out what the annual sales are.
- Figure what the owner(s) take home annually as a paycheck, PLUS an estimate of the personal things they write off. This gives us a broad idea of that seller’s discretionary earnings (SDE).
- Multiply the SDE by 2.0 to 2.5.