HOW MUCH IS MY COMPANY WORTH?

Do you know how much your company is worth? Can you increase the value? Is there a good time to sell? Will some buyers pay more than others? All these questions will help you answer what the value or worth of your company is. While it’s always important to know the answer to “how much is my company worth?”, it is even more important to know the answer if you ever plan on selling your business.

What is the best way to find out how much your company is worth? It’s important to take into account a variety of factors, such as revenue, cash flow, and future growth estimates. To find an accurate amount of what your business is truly worth, you will need to perform a business valuation – a detailed process that will discover your company’s true value through assets, future cash flow, and other important factors.

With a business valuation, you’ll first want to figure out what your business earns and know how profitable your business is. The most common measure is EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization. This measure makes it easier to evaluate. Buyers typically look at earnings before these non-cash expenses. EBITDA is an attempt to measure cash flow from the business on an apples-to-apples basis.

Next, estimate your business’ growth. It can be difficult to project growth, but if you look at past trends, you can come up with a reasonable estimate for future earnings. You also want to figure out how long your business will continue to make money. Some businesses have infinite lifespans while others have fixed dates.

Then, evaluate risks. With every business, there are risks, and the amount of risk depends on the industry. The discounted cash flow method, which is a valuation method, takes risks into account by discounting future earnings at a certain percentage rate. The greater the risk, the higher the discount rate, and the more important earnings in the near future are compared to the far future. Some businesses have little competition while others have huge competition.

Now, there are many different business valuation methods that can help you find the value of your company. One way is looking at the transaction history. With this method, you will look at the actual transactions your company made. You will focus on the most recent transactions and you can assess the revenue derived from these transactions in order to project what the business could generate from future transactions.

Another method to find the value of your company is discounted cash flow, which takes into consideration the overall performance of your company. The long-term performance of a company can help you figure out that company’s value. In this method, you look at how much cash your business has generated and how much you expect to generate in the future.