As an owner manager of a small or medium-sized enterprise (SME), increasing the value of your business is likely a key goal. Whether you plan to sell, attract investors, or simply strengthen your business’s position, enhancing value is crucial.
But where to start?
Understanding a common valuation method.
One of the most common methods of valuing a business is to multiply profits by a multiple.
The profits are measured by the EBITDA calculation that adds back; interest, tax, depreciation and amortisation (depreciation on intangible assets). Often if owners take a small salary and dividend the salary costs are added back and replaced by commercial salaries and unusual items that are one offs such as a large donation or bad debt are usually adjusted so the figure represents a “normalised” value.… Continue reading the rest of this article
