The value of your company is important regardless of whether you’re planning to sell your business or are thinking about a buyback with partners. The most popular method of estimating your company’s value in relation to the revenue it’s expected to earn over time.

A second method is to add all your assets (such as equipment, real estate, and so on) and subtract your liabilities (such as outstanding loans and debts). This method is beneficial for investors who wish to know the current worth of your business.

You can also assess the value of your business based on revenue or earnings. A common method is to use a multiple of the company’s annual EBITDA (earnings before interest tax, taxes, depreciation and amortization) which can range from two to six times revenue for smaller to mid-sized businesses. The multiples will depend on your industry and the https://dataroomsolutions.blog/what-is-a-capital-call-in-private-equity specific features of your company.

While general guidelines can be helpful but they don’t give the full picture required to assess the value of your business to sell. Many experts recommend consulting with valuation experts, who can help you weigh the advantages and disadvantages of your choices. They can consider the past profits, stability, assets and liabilities, and growth forecasts to give an accurate estimate. They can also offer advice on adjusting your business or financial structure to increase valuations. Consult your accountant or business advisor, or professional broker to help you locate the right expert.