Valuing Your Recent Business
If your business is recently started, you have a minimal track record.
In the normal M&A world, we would take a 3 or 5 year average.
Taking a 3 year average for a business that just started is not appropriate.
For a business that just started, but had losses the first 2 years, we wouldn’t count the first year or two where there were no sales or profit. A buyer would try to negotiate using that, but we would dismiss that quickly.
One stance we would take is that a business trending upward is always more valuable than the other way. The most recent year is always more heavily waited than what happened 36 months ago as well.
This is where moving averages comes in to play.
But if you only have 1 or 2 years of a track record, then valuation will reflect the scenario that’s happening. Meaning is this a hot business, and is there a lot of potential, or is this something that caught a wave, but on the way out?
There are various ways to go over valuation with a recent business.
Most importantly, we are going to analyze if this can be duplicated again. For many businesses that is a yes, and then, we will value it at a multiple following the recent year.
Please reach out to us if you have any questions relating to acquisitions:
Email – acquisitions@jarbly.com
Phone – (800) 773-1523
Simply engage us below to get started whether it comes to bringing you qualified buyers where we list your business for maximal value or engaging us to bring qualified and vetted businesses that match your exact target criteria such as industry and EBITDA multiple if you are buying a business:
Buyer-Side Engagement – Retain Us to Provide you with Qualified and Vetted Businesses that Match Your Target Criteria
Seller-Side Engagement – Retain Us to List Your Business and Bring Legitimate Buyers to the Table
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