{"id":561229,"date":"2019-08-17T03:02:32","date_gmt":"2019-08-17T07:02:32","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbgreenbay\/the-variables-that-drive-and-influence-business-valuations\/"},"modified":"2022-01-31T12:41:55","modified_gmt":"2022-01-31T17:41:55","slug":"the-variables-that-drive-and-influence-business-valuations","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/the-variables-that-drive-and-influence-business-valuations\/","title":{"rendered":"The Variables that Drive and Influence Business Valuations"},"content":{"rendered":"
\"\"<\/p>\n

If you\u2019ve never bought or sold a business before, then the factors that drive and influence business valuations likely seem a bit murky.\u00a0 In a recent Divestopedia article from Kevin Ramsier entitled, \u201c<\/span>A Closer Look at What Drives and Influences Business Valuations<\/span><\/a>,\u201d Ramsier takes a closer look at this important topic.\u00a0<\/span><\/p>\n

Business brokers and M&A advisors play a key role in helping business owners understand why their business receives the valuation that it does.\u00a0 No doubt, the final assessed value is based on a wide array of variables.\u00a0 But with some effort, clarity is possible.<\/span><\/p>\n

In his article, Ramsier points out that \u201cvalue means different things to different buyers\u201d and that the \u201cperceived value depends on the circumstances, interpretation and the role that is played in a transition.\u201d\u00a0 It is important to remember that no two businesses are alike.\u00a0 For that reason, what goes into a given valuation will vary, often greatly.\u00a0<\/span><\/p>\n

Looking to EBITDA<\/strong><\/p>\n

Ramier points to several metrics including return on assets, return on equity and return on investment.\u00a0 Another important valuable for companies with positive cash flow is a multiple of EBITDA, which stands for \u201cearnings before interest, taxes, depreciation and amortization.\u201d\u00a0 EBITDA is widely used in determining value.\u00a0 On the flip side of the coin, if the company in question has a negative cash flow, then the liquidation value of the business will play a large role in determining its value.<\/span><\/p>\n

Primary Drivers to Consider<\/strong><\/p>\n

Ramsier provides a guideline of Primary Drivers of Valuation, Secondary Drivers of Valuation and Other Potential Drivers of Valuation.\u00a0 In total there are 25 different variables listed, which underscores the overall potential complexity of accurately determining valuation.\u00a0<\/span><\/p>\n

In the Primary Drivers of Valuation list, Ramsier includes everything from the size of revenue and revenue stability to historical and projected EBITDA as well as potential growth and margin percentages.\u00a0 Other variables, ones that could easily be overlooked, such as the local talent pool and people training are also listed as variables that should be considered.<\/span><\/p>\n

Support for the Business Owner<\/strong><\/p>\n

The bottom line is that determining valuation is not a one-dimensional affair, but is instead a dynamic and complex process.\u00a0 One of the single best moves any business owner can make is to reach out to an experienced business broker. Since business brokers are experts in determining valuation, owners working with brokers will know what to expect when the time comes to sell.<\/span><\/p>\n

Copyright: Business Brokerage Press, Inc.<\/a><\/p>\n

Kuprevich\/BigStock.com<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

If you\u2019ve never bought or sold a business before, then the factors that drive and influence business valuations likely seem a bit murky.\u00a0 In a recent Divestopedia article from Kevin Ramsier entitled, \u201cA Closer Look at What Drives and Influences Business Valuations,\u201d Ramsier takes a closer look at this important topic.\u00a0 Business brokers and M&A […]<\/p>\n","protected":false},"author":2,"featured_media":561231,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3,8,2],"tags":[],"class_list":["post-561229","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-seller-articles","category-seller-faq","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/561229","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/comments?post=561229"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/561229\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media\/561231"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media?parent=561229"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/categories?post=561229"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/tags?post=561229"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}