How to Evaluate a Business Worth For Sale

Whether you're thinking about selling your business or you're considering a buyback from partners, determining your company's value is a crucial task. The most common method to determine the value of your company is based on its expected income over time.

Another method is to add up all your assets (such as real estate, equipment, and etc.)) and subtract your liabilities (such as outstanding loans and debts). This method is great for investors who wish to know the current value of your company.

You can also calculate the value of your business based on its revenue or earnings. A typical guideline is to use an increase of the company's annual EBITDA (earnings before interest tax, depreciation, taxes, and amortization) which can range between two and six times revenue for small to mid-sized companies. It is important to keep in mind that multiples depend on the nature of the industry and the particular characteristics of your business.

While rules of thumb can be helpful, they don't offer the complete view you need to assess the value of your company's assets for sale. That's why many experts recommend hiring valuation experts who know the intricacies of business value and assist you in weighing your options. They can consider the past profits, stability of assets and liabilities and growth forecasts to give you a precise estimation. They can also offer advice on how to adjust your financial structure or operations to increase valuations. Ask your accountant as well as your business advisor or professional broker to help you find the most qualified expert.