The best concise, informative and clear walkthrough of valuing a small business. I come from global M&A world and didn’t realize how different small biz world is. Amazing.
I would like to investigate the exact reasons why multiples go up for bigger businesses. (7:30) Could you please make a video on that, or point me to some learning material. Thank you very much from an eager student
I have just started reading financial statements and M&A reports. current interested in the Financial sector looking at how they move there securities around while contemplating on interest rates. I’m in an online class for accounting sometimes I think I learn much faster by just reading 10k reports because I can relate to real world applications vs playing the remember game like “EBITDA” and writing nonsense papers. (I want to drop out ) It’s a growing passion but school is a big drag . Anyways great videos and straight to the point
Brett, what are some reasonable liabilities to assume when purchasing a business? If you assume liabilities as the buyer should you ask for receivable accounts? MOST owners want all the money available out of the business when selling, what should buyer ask for when it comes to operating cost of the business?
Great set of videos, I love it. Do you have any videos detailing what comes after this first level of valuing an acquisition ? Meaning beyond the DCF or Comparable company approaches, obviously some tangible or intangible benefits stem from buying a company (as a larger company) - How does one go about valuing these synergies?
Great job Brett (love your presentation; very valuable for "dummying" it down! Are you on LinkedIn? I'm looking to do some Due Diligence part time as a CPA - if you have any leads I'd love to hear from you
Great video, quick question. Do you add the assets not part of discretionary earnings and subtract any buyer assumed liabilities BEFORE or AFTER applying the multiplier?
Thanks for the content, it's very informative and insightful. My question is, what is usually contained in the asking price of a business for a share sale transaction? What belongs to the seller and what belongs to the buyer? Would I be right in assuming that the seller keeps all the cash and retained earnings of the business as at the transaction date while the buyer keeps the account receivables, WIP, short term liabilities and long term liabilities? If this is true, then how do you factor it into the company's valuation and selling price?
Hi Brett, it would be great if you could make the audio of your videos available on a podcast platform. I would love to listen to a playlist of your content while I’m going on walks.
Jeff, thank you for that suggestion and the great feedback on the content generally. We are looking into repurposing content through different channels, including podcasting. If and when that happens, I will let you know.
That's not a set multiple for all industries. I just used it as an example. That said, 2x SDE is in the ballpark for average sale multiples (SDE, not EBITDA) for many small (main street) businesses.
Thanks for the vid real helpful. Would this same principal be smart to use with nano cap public companies as well and dividing by outstanding shares? Or is this strictly for private firms?
Shane, we work on deals all over, although there can be situations where local law/custom issues arise that are best addressed by local counsel/advisors. That also happens on our deals here in the U.S. when the law of a state (that applies to our deal) might differ from the states where we practice, and it also happens when certain subject matters are outside our sphere of knowledge. This often becomes a question of dollars and significance since there are some areas of the law, e.g., employment, trademark, regulatory, where we are a great choice on certain projects, although other times, especially when the dollars and stakes ratchet up, that we'd advise our client to bring in a subject matter expert. It's kind of the same thing when multiple jurisdictions (states, countries) are involved - it's a judgment call regarding whether we need more specific expertise.
By far the most valuable RUclips channel in the M&A field… Everyone else is hype … Brett gets down to business… Love it
Thank you, Kevin!
The best concise, informative and clear walkthrough of valuing a small business. I come from global M&A world and didn’t realize how different small biz world is. Amazing.
1st video I've come across. I can tell you speak from experience. I choose you pikachu. You are my mentor
This guy is so clear with his explanations. Thank you, for your valuable contribution 🙏
Thank you, Shane.
I’m looking at a daycare. Value is probably the value of the real estate plus 1-1.5x. Which method/model would you use for a transaction under $1mil.
I would like to investigate the exact reasons why multiples go up for bigger businesses. (7:30) Could you please make a video on that, or point me to some learning material. Thank you very much from an eager student
Brett when doing a smaller deals- under a million, is the process very different?
I have just started reading financial statements and M&A reports. current interested in the Financial sector looking at how they move there securities around while contemplating on interest rates. I’m in an online class for accounting sometimes I think I learn much faster by just reading 10k reports because I can relate to real world applications vs playing the remember game like “EBITDA” and writing nonsense papers. (I want to drop out ) It’s a growing passion but school is a big drag . Anyways great videos and straight to the point
What Would you say the medical oxygen market multiplier would be in 2022? Or is the market too good to consider multipliers?
Are the same parameters for a roll up situation
you are very good at explaining God bless you
Brett, what are some reasonable liabilities to assume when purchasing a business? If you assume liabilities as the buyer should you ask for receivable accounts? MOST owners want all the money available out of the business when selling, what should buyer ask for when it comes to operating cost of the business?
Excellent Info....presented Very Well...Many thanks
Great video. Thank you.
Great set of videos, I love it.
Do you have any videos detailing what comes after this first level of valuing an acquisition ? Meaning beyond the DCF or Comparable company approaches, obviously some tangible or intangible benefits stem from buying a company (as a larger company) - How does one go about valuing these synergies?
@BrettCenkus
When you say multiple, is that the same thing as cap rate ?
It is similar.
Whereas NOI (net operating income) X cap rate = sale price of property,
earnings/EBITDA/SDE X multiple = sale price of business
How do you value a business with 1 person (the owner) running it ? How many times earnings would it be worth ?
I have the same question. Seems to be a low multiple. You might be buying a job instead of a business.
Great job Brett (love your presentation; very valuable for "dummying" it down! Are you on LinkedIn? I'm looking to do some Due Diligence part time as a CPA - if you have any leads I'd love to hear from you
Multiple times sde ? Or do u mean sde plus ebit
Interesting point on DCF model
Very informative, I’m going to reach out to you. Thank you for the solid video.
I have a company I'm thinking of selling. how much does a business broker normally make on a sell? where can I find a business broker?
Your channel is fantastic! You are a great teacher!
Thank you, Luke!
Great video, quick question. Do you add the assets not part of discretionary earnings and subtract any buyer assumed liabilities BEFORE or AFTER applying the multiplier?
Hello, I have a buyer for my business. I just need to know how to get some figures for the sale. Are you taking on new clients?
Thanks for the content, it's very informative and insightful. My question is, what is usually contained in the asking price of a business for a share sale transaction? What belongs to the seller and what belongs to the buyer? Would I be right in assuming that the seller keeps all the cash and retained earnings of the business as at the transaction date while the buyer keeps the account receivables, WIP, short term liabilities and long term liabilities? If this is true, then how do you factor it into the company's valuation and selling price?
Hi Brett, it would be great if you could make the audio of your videos available on a podcast platform. I would love to listen to a playlist of your content while I’m going on walks.
Jeff, thank you for that suggestion and the great feedback on the content generally. We are looking into repurposing content through different channels, including podcasting. If and when that happens, I will let you know.
Why is the multiple 2? Just curious. Seems like an arbitrary number to me.
That's not a set multiple for all industries. I just used it as an example. That said, 2x SDE is in the ballpark for average sale multiples (SDE, not EBITDA) for many small (main street) businesses.
@@BrettCenkus thanks man!
yw!@@OKayMMusic
This is Great content my friend!
Thank you.
Thanks a lot for great financial and law education!
Hi Brett do you operate in the UK
Thanks for the vid real helpful. Would this same principal be smart to use with nano cap public companies as well and dividing by outstanding shares? Or is this strictly for private firms?
very clear explanation. Thank you sir...
You're welcome
Hi Brett do you work internationally or are local deals best served by local people?
Shane, we work on deals all over, although there can be situations where local law/custom issues arise that are best addressed by local counsel/advisors. That also happens on our deals here in the U.S. when the law of a state (that applies to our deal) might differ from the states where we practice, and it also happens when certain subject matters are outside our sphere of knowledge. This often becomes a question of dollars and significance since there are some areas of the law, e.g., employment, trademark, regulatory, where we are a great choice on certain projects, although other times, especially when the dollars and stakes ratchet up, that we'd advise our client to bring in a subject matter expert. It's kind of the same thing when multiple jurisdictions (states, countries) are involved - it's a judgment call regarding whether we need more specific expertise.
I'm planning to sell my small storefront business to an employee who helped me start up. What is my first step to take?
Get your income statements ready to show them. Your basis for value.
What is the best way to reach out to you for advice or a consultation?
Kenneth, you can schedule a paid call at clarity.fm/brettcenkus.
very intuitive .. thanks again
Great video thanks Brett
this guy is so good
Thank you, Dan!
Thankyou yet again! 👍
Salers/building/agreed'ment
Hello , good day, let me Say something, I like it your videos
thank you!
Thanks Brett!!
You're welcome, Brad. Thank you for watching!
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Hahaha a lawyer pretending to have expertise in business valuation. Stay in your lane buddy
Do you have any substantive constructive criticism?
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