What is Your Business Worth?

Are you deciding to sell your business or grow your business by acquiring another company?

It is important that a buyer or seller know the value of a business. If the SBA, a conventional bank, or seller is financing, both buyer & seller should have a clear idea as to the function of cash flow. It is advised for both buyer & seller have an accountant to verify information.

1. Cash Flow / Net Profit Pre-Tax

Gross Revenues
- Cost of Sales
= Gross Profit
- Operating Expenses
- Debt Service
= Cash Flow/Net Profit Pre-Tax

2. Total Owner Benefit

Owner Salary
+ Interest Expenses
+ Depreciation
+ Fringe Benefits (car, trips, credit cards, not related to the business)
= Total Owner Benefit

3. Annual Lease Expense, Pre-Tax

Triple Net Lease Payment (Annual Outflows)
+ Annual Lease Expenses
= Annual Lease Expense, Pre-Tax

4. Lease Expense per Year After-Tax

Annual Lease Expense, Pre-Tax
x (1 – Tax Bracket)
= Lease Expense per Year After-Tax

5. Taxable Loss/Income

Cash Flow/Net Profit Pre-Tax
- Interest Payments
- Depreciation
= Taxable Income
x Tax Bracket
= Taxable Loss/Income

6. After-Tax Cash Flow

Cash Flow Pre-Tax
- Taxable Loss
= After-Tax Cash Flow