Nov 09, 2020
Although we are still in the midst of a pandemic, the M&A market has been active for many industry segments. Whether your business has been faced with difficulty or it has done well during this time, you may be thinking about planning your exit. One of the first questions we are asked when business owners are considering an exit is, “What is my business worth?” Valuing a business can be a bit complicated, and now owners must consider the impact Covid-19 has had on their business and the uncertainty of the immediate future.
Many business owners expect to restore revenues to pre-pandemic levels by second quarter of 2021, but even so, the loss of revenue and whether the business was a recipient of a PPP loan will be factors in a valuation.
Historically, for many people the simplest method to value a business has been to apply a multiple to the calculation of adjusted Earnings Before Interest, Taxes, Depreciation and Amortization…or EBITDA. Add Covid to the equation, and some parties are including “C” to the calculation to get adjusted EBITDAC. While this calculation will need to disclose in more detail how it’s being utilized, it can give you a good ballpark figure, but it may not tell the whole story. A professional business valuation will look deeper into the numbers and provide a more thorough analysis of the factors that drive value, such as:
For a more accurate valuation that considers these and many other factors, we advise having a professional analyze and document the drivers of value and arrive at a conclusion that can be used to fully understand and maximize the value of the business. O’Keeffe & O’Malley can provide different levels of valuation services, from simple calculations of value to comprehensive reports. For valuation advice, call us at 913.648.0185 or email firstname.lastname@example.org.