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Because of this, businessvaluation plays a crucial role in strategic decisions, whether buying, selling, or expanding operations within this sector. Proper valuation ensures shareholders can maximize their value, whether they are buying, selling, or seeking to expand their operations.
as well as, “How does this compare to other businesses of a similar size?”. In addition to SDE, another relevant earnings measure is EBITDA. Non-operating revenue is unrelated to the business operations, such as interest revenue, rent from a property owned through the business or sale of equipment or part of the business.
Here are some of the key challenges we often encounter when valuing a business for SBA lending purposes. And, how the team at Peak BusinessValuation provides effective solutions. Peak BusinessValuation provides SBA businessvaluations for more than 90 SBA lenders across the country.
Income-Based Valuation This forward-looking approach estimates the present value of the business's future cash flows. Discounted Cash Flow (DCF): This method involves projecting future earnings and discounting them to present value.
I have heard many appraisers suggest that one should not normalize owner compensation when valuing minority interests “because the minority shareholder cannot change compensation.” Travis Harms and I cover the topic of normalizing adjustments in our book, BusinessValuation: An Integrated Theory Third Edition , on pages 117-123.
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