With regard to simple valuations, here are some statistics surrounding private businesses might benefit from thinking about.
If we take a business that generates $10 million in sales and that has an EBIDTA of 10 percent, a sale might have the following result:
sales | $12,000,000 |
ebidta of 10% | $1,200,000 |
sale price of 5.0 x ebidta | $6,000,000 |
taxes and expenses on business sale – 35% | $2,100,000 |
net proceeds from sale available to invest | $3,900,000 |
Naturally, this assumes no bank debt, and you own 100% of the stock.
It also assumes you, as seller, do not have to take back seller notes (partially financing the sale), which at this level today is quite common.