The National Directory of Certified Public Accountants

Ask A CPA - Small Business Services

I Want To Sell My Business . How Much Is It Worth ?

There is no simple answer or formula for evaluating the price of your business. There are business brokers or appraisers that specialize in valuing a business. Some brokers believe that cash flow is the most important factor to consider. Some brokers use one of three possible calculations to determine cash flow. Earnings plus Interest plus Taxes = cash flow. Earnings plus Interest plus Taxes plus Depreciation plus Amortization = cash flow. Earnings plus Interest plus Taxes plus Depreciation plus Amortization plus Owner's Salary = cash flow. Other important factors to consider include competition, industry trends, balance sheet, income statement, gross margins, type and condition of equipment, customer base, and growth opportunities for company, owner's role, financial needs and goals, difficulty of someone else learning the business and how other companies of similar size in the industry perform. Speak to your local CPA or business broker to assist you in selling your business.

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