Small Business valuation

[avrumy]

Does anyone know how to evaluate a small business? Do you take the Net profit before salary for valuation or after?
Thank you

[churnbabychurn]

Does anyone know how to evaluate a small business? Do you take the Net profit before salary for valuation or after?
Thank you

There are many ways. For a very small business its best to include the total benefit to the owner including salary and multiply that by 2-5...

Alternatively you can do a net cash flows analysis or an asset based valuation.

[avrumy]

Are you saying that the net profit before salary taken should be included in the valuation?

[churnbabychurn]

Are you saying that the net profit before salary taken should be included in the valuation?

I said that the gross annual gain to the owner should be used. Including Salary, draw etc

[Simcha89]

depends on the type of business, every industry has a different evaluation

its usually EBITDA + owners salary - what it would cost to replace the owners duties X the multiple of the industry

[Aerial Dag]

http://pages.stern.nyu.edu/~adamodar/


Best place to learn about valuation if you have the time and energy.