Mergers & Acquisitions
A Beginner’s Guide to Business Valuation
Lessons Learned from 20 Years in the Trenches
Written by Jacob Orosz, President of Morgan & Westfield
A Beginner’s Guide to Business Valuation walks you step by step through valuing a business with $1 million to $50 million in revenue. You’ll learn the fundamental factors that determine the value of any small to mid-sized business and simple methods for maximizing value when it comes time to sell. This practical guide is based on what the author has gleaned from 20 years in the trenches selling businesses. It’s written for the layman, specifically meant to address the real-world methods buyers use to value businesses.
This one-stop compendium explains the most common valuation concepts and offers sound advice for anyone looking to sell a small to mid-sized company. A Beginner’s Guide to Business Valuation is a conversational field manual that simplifies a technical and complex area of practice with real-world stories. It explains valuation concepts in language any business owner can understand, without the jargon.
This comprehensive handbook is written by Jacob Orosz, one of the industry’s leading authorities on lower middle-market valuation, host of the M&A Talk podcast, and president of Morgan & Westfield, a nationwide M&A firm. Jacob has over 20 years of M&A experience and has valued and sold hundreds of businesses.
Accounting numbers are the beginning, not the end, of business evaluation.
What’s Covered in the Book
The difference between valuing small and mid-sized businesses, as well as private and public companies
The 10 most important valuation concepts you should understand
Information on why the range of values can be so wide for a business
How to normalize your financial statements to calculate seller’s discretionary earnings (SDE) or earnings before interest, taxes, depreciation, and amortization (EBITDA)
Advice on whether you should use SDE or EBITDA to value your business
A no-nonsense overview of the most common valuation methods
A simple explanation of the ROI on businesses and how ROI differs from other valuation methods
An overview of the four types of buyers, their goals and criteria, and how to position your business for each buyer type
How a company’s reason for acquiring you can affect the price you receive
A review of over 50 factors that can impact the value of your business
Advice on transaction structure and how it can influence your net proceeds
Guidance on hiring a professional to appraise your business and how to avoid a 100% to 500%+ markup on an appraisal
A simple framework with over 100 tips for implementing a strategy to increase the value of your business
A Beginner’s Guide to Business Valuation is for owners of businesses with $1 million to $50 million in annual revenue. Most businesses in this size range can be sold to either an individual or a corporate buyer. Unfortunately, books on this subject often address only one of these potential markets. The advice in this guide is custom-tailored to businesses in this range to help you understand the benefits and downfalls of each type of buyer, as well as how to best prepare for them.
Discover the fundamental principles of valuing your business from an industry veteran in this straightforward book that blends the art and science of determining a business’s true worth. Explore the realities of business valuation in the real world, not the academic world, along with sound strategies for identifying and maximizing value drivers.
This book isn’t theoretical – it’s based on over 20 years of my experience as an M&A advisor selling and valuing businesses. I’ve dealt with thousands of buyers from strategic acquirers and corporate buyers to private equity firms and wealthy individuals. I will discuss where value comes from and walk you through a commonsense framework to increase the perception of value in any buyer’s eyes.
Find out why improving the value of your business isn’t as simple as boiling the process down to a few metrics; rather, there are hundreds of potential factors that can affect it.
You’ll learn how transaction structure can impact the value of your business, and the ground rules for navigating the sale process to maximize price. The inherent worth of your business is more than just its price. There are many other factors including how much cash down you receive, how transaction structure affects your proceeds after taxes, and whether part of the purchase price is dependent on future events that can impact the value you receive.
This advice is rooted in the reality where companies are actually bought and sold, not in the theoretical world filled by business appraisers, attorneys, and judges. While simple methods of valuation such as using EBITDA and multiples exist, they are rarely easy to apply and fully understand. A Beginner’s Guide to Business Valuation shows you how.
My goal is to equip you with valuable expertise to enhance your company’s value, increase its marketability, and capture the most value possible during a sale. This is a book about selling smart and achieving maximum value for the time and effort you’ve put into your company.
Arm yourself with practical knowledge that’s been proven over time. Order your copy today.
Table of Contents
About the Author
Chapter 1: Eight Valuation Concepts
Chapter 2: Analyzing Financial Statements
Chapter 3: Business Valuation Methods
Chapter 4: Obtaining an Appraisal
Chapter 5: How Buyer Type Impacts Value
Chapter 6: Factors That Can Affect Value
Chapter 7: How Transaction Structure Impacts Value
Chapter 8: The Foundations of Maximizing Value
Chapter 9: The Mechanics of Maximizing Value
A Beginner’s Guide to Business Valuation
Lessons Learned From 20 Years in the Trenches
What a company is worth depends on who wants to buy it.
Michael F. Price, American Investor
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