August 3 2018 About Dale Clack VP Loan Officer Midwest Regional Bank SBDC Financial Consultant for 7 years Colorado Real Estate Broker since 1994 Business Broker for 17 years IBBA Instructor Business Valuation for 14 years ID: 730228
Download Presentation The PPT/PDF document "Valuing Businesses Presented by Dale L C..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Valuing Businesses
Presented by Dale L Clack
August 3, 2018Slide2
About Dale Clack
VP, Loan Officer - Midwest Regional Bank
SBDC Financial Consultant for 7 years
Colorado Real Estate Broker since 1994
Business Broker for 17 years
IBBA Instructor, Business Valuation for 14 years,
Taught over 1,000 business brokers nationwide
CBI – Certified Business Intermediary, IBBA
CPA – California and Michigan for 20+ years
MBA – Finance, Golden Gate University
BA – Accounting, Michigan State UniversitySlide3
Steps in the Process
Step 1 – What is for Sale?
This determines what methods of valuation
Step 2 – Recast Financial Information to find real economics of the Biz
Step 3 – Estimate a Selling PriceSlide4
Step 1 – What is for Sale
100% of the business
Assets vs. Stock
Answer impacts approach, methods, value
Value business separately from the real estate
What is "goodwill" and how is it valued?Slide5
Step 2- Recast Financial Information
Collect 3 years of data to review trends
Determine EBITDA – for value over $1Mil
Earnings Before Interest, Taxes (income), Depreciation & Amortization
Determine DE - for small biz valued up to $1M
EBITDA + fair compensation for one owner
Danger in having too many "add-backs“
Include "add ins": underinsured, fair market rent, kids work for freeSlide6
Step 3 – Valuation Approaches
Just like in Real Estate …
Asset Approach
Add up the value of assets
Income Approach
–
Capitalize an income stream
Market Approach
– Sale of “Comps”
Data Bases: BizBuySell,
BizComps
, Pratt’sSlide7
Step 3 – Methods in the Approaches
Percentage of Sales
Use “comps” from a data base
Multiple of DE or EBITDA
Use “comps” from a data base
DE: 1x – 3x
EBITDA: 3x – 5x
Capitalized Income (EBIT) to value invested capital
Build up a cap rate that is appropriate for the risk
Could vary between 20% to 50%
Reconcile the differences between methods
Which are better & why
Slide8
Business Valuation Summary
Business valuation is a complex task
Requires expertise to do it right
There are experts to assist you
Business Brokers, CPAs, Attorneys, Business Appraisers
Advise your customer/client:
Hire an attorney
Hire a CPA with business value expertise and tax knowledge for this transaction Slide9
Resource
“CABI” - Colorado Association of Business Intermediaries
Business Brokers with the CBI designation
Attorneys & Lenders who facilitate deals
CPAs with business valuation knowledge
URL: www.coloradobusinesses .com
FAQ’s
Articles librarySlide10
Contact Information
Dale Clack
Work: 720-274-9326
Mobile: 303-204-3106