Swann Real Estate
  • Home
  • About
  • Search
    • Search Residential
    • Search Commercial
    • Search Rental
  • Sell
    • Sell Residential
    • Sell Commercial
  • Business Brokerage
    • Brick & Mortar Business Brokerage
    • Online Business Brokerage
  • Property Management
  • Blog
  • Contact

Real Estate Tips and Tricks.
We've got you covered.

What Is My Business Worth?

2/26/2019

Comments

 
Picture
For business owners, an important question that often goes unanswered is what is my business worth? Outside of home ownership, business ownership is typically the single most valuable asset that a person will own. Although there are ways to estimate your home value (your friendly neighborhood real estate broker, online services such as Zillow!, local property appraiser), how do you track the value of your business?

Business brokerage is an overlooked field in relation to traditional real estate. There is plenty of education and information available on traditional real estate, investment properties, approaches to property valuation, and general real estate market guidance.   On the other hand, many commercial real estate brokerages don't  work in the field or publish information relative to business brokerage.  At Swann Real Estate, we want to provide this information to you.  Let's start with three major factors that influence what your business is worth...

​1) Net Earnings
​

Net income (or more accurately, "seller discretionary earnings") is at the core of a business valuation.  Annual net income is determined and certain expenses are "added-back" to calculate seller discretionary earnings (SDE).  These add-backs could be auto expense, trip expense, interest expense, and other figures that could be rendered non-applicable and/or discretionary if a new owner was to purchase the business.

Starting with tax returns for the past three years is a good way to determine net income and what these add-backs may be for your business to accurately calculate seller discretionary earnings. As a result, business tax returns are the first things we look to analyze when determining market value of a business.  Typically a business is worth a multiple of these seller discretionary earnings.

2) Business Type 

When determining what multiplier should be applied to seller discretionary earnings, business type is a large component.  What is the industry of the business? How is the income generated? Is it tied directly to the owner or are there systems in place to ensure cash flows if the business was to be sold?

​3) Recent Business History & Growth Potential

Recent business history and growth potential also affects the multiplier. Are the tax returns showing a positive or negative trend? Are there additional revenue streams that could be generated in the business? Business history and growth potential impact the multiplier and as a result increase or decrease the value of a business.

--

This is the starting point to determining market value for a business. There are many additional factors that play into the equation as well.  At Swann Real Estate, we can help to identify the factors, whether you a preparing for a sale or simply looking to better monitor the health and value of this important asset.  Visit our Business Brokerage page to reach out for more information.

-- Turner Swann, CCIM
Comments

Swann Real Estate

Swann Real Estate has been an established part of the local community since 1987.

Contact Us

Archives

August 2022
February 2022
January 2022
October 2021
July 2021
May 2021
March 2021
December 2020
October 2020
August 2020
July 2020
May 2020
April 2020
March 2020
February 2020
January 2020
December 2019
November 2019
October 2019
September 2019
August 2019
July 2019
June 2019
May 2019
April 2019
March 2019
February 2019
January 2019
December 2018
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018
January 2018
December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
June 2015
April 2015
March 2015

Categories

All
Business Brokerage
Commercial
Community
Community Spotlight
Educational
Featured Listings
Finance
Local News
Property Management
Residential

Have a question? We have an answer!

Click Here To Contact Us

We Promise:
Integrity

We promise to provide honest and accurate assessments of property values and current market conditions so that you can make informed decisions.

We Promise:
Responsibility

We promise to provide information to best position you in the marketplace and to treat all parties with respect and dignity throughout the entire process.

We Promise:
Persistence

We promise to keep you well informed and highly engaged during the process and to utilize all of our resources and energy to achieve your desired results.
Photo used under Creative Commons from sun dazed

Resources  |  p. 386-738-3688  |  f. 386-738-5788  |  Toll Free: 800-494-4687

share

© Swann Real Estate​  |  Website Design by New York Ave.

Swann Real Estate