Picture a magic slot machine. Each time you pull the arm, you make back a multiple of whatever you wagered. How much time would you devote to cranking that arm?
When it comes to the value of your business, you can make many bets, but only one has a virtually guaranteed return. Most companies are valued on a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA), so every dollar of incremental profit you earn in the short term will translate into a multiple of that down the road. Calculate your EBITDA on our website!
Since most acquirers look at three years’ worth of financial reporting, squeezing out every extra dollar of profit makes even more sense if you’re considering an ownership transition in the next thirty-six months.
The Downside of Using Your Company’s Bank Account as a Slush Fund
There’s a downside to treating your company like your piggy bank. Co-mingling personal and business expenses while letting other costs go unchecked may help you reduce taxes in the short term but could end up costing you more in lost value when you decide to sell your business. Instead, keep your P&L “CLEAN” to jack up the value of your business.
If you are interested in a more comprehensive business valuation and knowing how your business can be sold on the market, please contact us for more details! We aren’t only provide you with a value of your business, our score questionnaire, which takes only a few minutes will present you with all qualitative value drivers !
Magnus Business Group, Inc.
Westlake Village, CA 91362