The Deal Board Podcast
How much is a business worth? with Andrew Cagnetta and Jessica Fialkovich

Episode 4

How much is a business worth? with Andrew Cagnetta and Jessica Fialkovich

"Business Valuation Is An Art, Not A Science"

Description:

Business valuation experts Andy and Jessica talk about the worth of a small business from the buyer’s and seller’s perspectives. Business valuation is an art and it can be approached through different methods, highlighting the assets, the earnings, or the market. As a buyer or a seller, you need to educate yourself about business worth, to understand how it operates under different variables, keeping it simple and finding the best deals according to the particular circumstances each business presents. Transworld Business Advisors are experts in the arena of valuation and in this episode expose the main facts for you to understand the pillars of a business’s worth. Chris Cantwell (Denver) presents a Restaurant and Bar at the Resort Mountain Communities, $1.3 million in revenue this year, SDE $300,000. They are asking $799,000 for the business. Call 303-408-3882 or email chris@tworlddenver.com.

Key takeaways:

[:45] Two times!
[2:55] Small businesses from $0 to a million dollar SDE.
[4:11] Three approaches: Assets, Multiple of Earnings, and Comparable method.
[5:47] The Market Method.
[6:40] Comparing gross revenues.
[7:52] Look at the earnings.
[10:19] Quantity and quality.
[10:49] Deal of the week: Florida with Anthony Geronimo, a buyer with extensive hospitality background bought a dry cleaner, sold for $1,950,000; great finances plan.
[14:10] What are quality earnings made of?
[15:43] The simplest way of predicting the future is looking to the past.
[18:40] The buyer doesn’t think the business is worth its price and the seller doesn’t think they are getting enough money.
[19:52] Listing of the week: Amazing Restaurant in Denver.
[21:11] Main point of valuation when shopping or selling a small business.
[23:40] Wait until you have real reasons to sell your business.
[24:23] All about earnings.
[25:25] Assets method is used for the business that is not making money.
[26:38] Buying a business is one of the safest investments.
[28:44] Educate yourself, know the market.

Show Notes:

Mentioned in this episode:

Tweetables:

“Look at earnings for the true valuation.” #transworldbusiness #valuation “The earnings method is truly based on future earnings.” #transworldbusiness #earningmethod “The simplest way of predicting the future is looking into the past.” #transworldbusiness #businesspredictions “The buyer doesn’t think the business [is] worth its price and the seller doesn’t think [they are] getting enough money.” #transworldbusiness #buyer #seller

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