Valuing Your Business – How to Get Started
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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here with Matt Goldston, an Entrepreneurial Advisory Services Director and one of the faces of PKF Texas’ Transaction Advisory Services team. Matt, welcome back to The Playbook.
Matt: Thank you very much, Jen.
Jen: So, I know you were talking with one of our guest hosts, Russ Capper, about selling your business, and what I want to touch on today is value. What does a company need to do to learn the value of their company?
Matt: Looking at value, it’s often prescribed as a multiple of EBITDA. Knowing what EBITDA is: Earnings Before Interest, Taxes, Depreciation & Amortization; that’s key. Working on that, and then you’re only given a range the company could transact, from X to X, and working within those two values can end up being a huge different to a seller.
Jen: What does a company need to do to really kind of get ready to find that valuation?
Matt: Be prepared and act now. The Chinese proverb says, “The best time to plant a tree was twenty years ago. The second-best time is today.” Today is today, it’s time to look at that. Being prepared and keeping financial records in order, issuing financial statements on a GAAP basis, having a great firm help you do that – those are all key.
Jen: Do you get a banker involved with the valuation process?
Matt: Usually, you get an accounting firm or a business advisory group could help you with that.
Jen: Perfect. We’ll get you back to talk a little bit more about selling your business in another episode. Sound good?
Matt: Absolutely it does, Jen. Thank you.
Jen: Great. For more information about this topic, visit PKFTexas.com/TransactionAdvisoryServices. This has been another Thought Leader Production brought to you by PKF Texas – The Entrepreneur’s Playbook. Tune in next week for another chapter.