Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This UA-cam channel is very informative and effective.
Hey, I really enjoyed this but had a question. So is ROR at the rate you estimate (20% standard is your example) the price you’d then value the business at? I wasn’t sure how you tie it together to the pricing.
Are there considerations if assets (and subsequent debt) are being sold with the business? For example, if a bakery owner wants to sell his 5 year old bakery due to illness (bakery closed, no longer earning), including machinery, then there is more risk (since NI or EBOTDA) is less…. Butttt there is a significant amount of assets (ovens, commercial mixers). How are those assets factored in?
Yes, when assets are being sold with the business, their valuation is a critical factor in determining the overall value. In the case of the bakery owner selling due to illness, while reduced earnings impact the valuation based on income metrics like Net Income (NI) or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), the assets such as ovens and commercial mixers still hold tangible value. These assets would typically be assessed separately through methods like replacement cost or market value, and their inclusion can mitigate some of the risk associated with reduced earnings, potentially increasing the overall valuation of the business.
I appreciate your detailed response. That what I was thinking as well. Would you have additional resources you recommend looking at for business valuations? @@TGGAccountingSanDiego
That's exactly how I sold my 3 companies 4 to 5 times net profit that's it takes 5 min to evaluate..I am selling the 4th one next month same way thanks
Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This UA-cam channel is very informative and effective.
Hey, I really enjoyed this but had a question. So is ROR at the rate you estimate (20% standard is your example) the price you’d then value the business at? I wasn’t sure how you tie it together to the pricing.
Glad you found it useful! 20% is based on 5X earnings multiple. Since businesses fail at such a high rate you have to be compensated for that risk.
If I understood correctly, it means that if the business makes 1M in earnings at a 20% ROR, then its value would be 5M.
@@altar7885 I am also confused about how the two link together. A lower risk (better buy) at 12% would value the business less....
That is very helpful, Thank You so much
You're going to be my new mentor.
3:00. Rate of return, thanks, helpful.
Are there considerations if assets (and subsequent debt) are being sold with the business?
For example, if a bakery owner wants to sell his 5 year old bakery due to illness (bakery closed, no longer earning), including machinery, then there is more risk (since NI or EBOTDA) is less…. Butttt there is a significant amount of assets (ovens, commercial mixers). How are those assets factored in?
Yes, when assets are being sold with the business, their valuation is a critical factor in determining the overall value.
In the case of the bakery owner selling due to illness, while reduced earnings impact the valuation based on income metrics like Net Income (NI) or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), the assets such as ovens and commercial mixers still hold tangible value. These assets would typically be assessed separately through methods like replacement cost or market value, and their inclusion can mitigate some of the risk associated with reduced earnings, potentially increasing the overall valuation of the business.
I appreciate your detailed response. That what I was thinking as well. Would you have additional resources you recommend looking at for business valuations?
@@TGGAccountingSanDiego
great video!
Glad to hear you enjoyed it!
That's exactly how I sold my 3 companies 4 to 5 times net profit that's it takes 5 min to evaluate..I am selling the 4th one next month same way thanks
Thanks for the info
Happy to help!
great video! thanks a lot
Thank you very much!
Y------T-----tracks!
If you give it to finance people they will take 3 months to give you the same answer
Total crap shows how stupid brokers are