Double Benefit or Double Whammy

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Double Benefit or Double Whammy

When you sell in good economic times, most times your cash flow is growing, so you get more value out of your business. But multiples are also going up, so you get the benefit of rising cash flow plus rising multiples. Unfortunately, the reverse can happen in a down economy.

Consider the difference:

$2 million EBITDA x 6.0 multiple = $12 million value

$1.7 million EBITDA x 5.0 multiple = $8.5 million value (29%)

If I could have my wish, I would ask every business owner to do the following:

Decide what kind of lifestyle you want after your business is sold (Lifestyle Number™). Talk with your spouse, meet with your financial planner, generate your ideal scenario, and work the numbers.

Once you know that, the next logical step is to get an Estimate of Value (EOV) completed. Then, talk to an M&A tax specialist to find out what you’d net after the sale. If the Net Number meets or exceeds your Lifestyle Number™, then it’s time to take a serious look at selling all or part of your company. (If not your EOV will help you identify key areas to grow your company.)

If you could live your ideal lifestyle, why would you wait?

Excerpted from Finish Strong: Sell Your Business on Your Terms, by Scott Bushkie.

Learn more when you buy the book on Amazon. Or contact us for a no-cost, confidential discussion.

By Scott Bushkie

Scott Bushkie Managing Partner, Founder, CBI, M&AMI, Fellow of the IBBA.

With more than 20 years in the Mergers and Acquisitions (M&A) industry, Scott is a recognized leader in the field, providing exit strategies, business valuations, and M&A advisory services to business owners in the lower middle market. He has successfully executed sales to domestic and international buyers, private equity firms, family offices, and strategic buyers. Follow DealCoach on Linkedin

Find out what your business is worth today with a DealCoach Business Valuation or a Business and Market Analysis.

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