When selling a business, it is important to understand the factors that determine its value and how much you can expect to receive for the sale. In this article, we will discuss how much you can sell a company for, including the typical range for small businesses, the value of assets and discounted cash flow analysis, and other factors that may influence the sale price.

How Much Can You Sell a Company For?

A business will likely sell for two to four times seller’s discretionary earnings (SDE) range –the majority selling within the 2 to 3 range. Typically, the selling range for small businesses is between two-times and three-times earnings. Outliers may be multiples of one-time or less.

In order to sell your business, you must first find out what it’s worth by tallying the value of the assets, doing a discounted cash flow analysis and much more. In most cases, people can determine their online business value by multiplying their average monthly net profit by 36x – 60x. For example, if a business’s average monthly net profit is $5,000, its value would be between $180,000 and $300,000. Depending on the size of the deal and the industry, that can range from 2-10 times the profit. Smaller businesses (under $3M in price) generally sell for 2-3 times the net profit.

In doing some research, I have always read that a general rule of thumb for selling a business is 2-3 times net profit. In using that example, the business you used to calculate the value of the business from the previous example would be worth between $360,000 and $900,000.

Factors That May Influence the Sale Price of a Business

When selling a business, there are a variety of factors that may influence the sale price. These include:

  • The industry of the business
  • The size of the business
  • The amount of debt held by the business
  • The reputation of the business
  • The condition of the assets
  • The future prospects of the business
  • The location of the business

It is important to consider all of these factors before putting a business up for sale. A good business broker can help you identify these factors and determine the best price for your business.

Conclusion

When selling a business, it is important to understand the factors that determine its value and how much you can expect to receive. Generally, small businesses will sell for two-times to three-times their net profit, but there are a variety of factors that may influence the sale price. If you are looking for answers to all your questions about selling a business and about business brokers, check out Atlantabusinesses.com for more information.

What is the value of a business that has $1 million in sales?

The value of a company with $1 million in revenue could range between $1 million and $5 million, depending on how much profit it makes and how much its assets are worth. Generally, businesses are worth one to five times their annual sales.

What is the worth of a company when it is sold?

Calculate the business’s worth by starting with the sum of all the assets, including all equipment and stock, and subtract any debts or liabilities. This will provide the value of the business’s balance sheet.

What is the typical selling price of businesses?

The common selling price for small businesses can be anywhere between two and three times their annual earnings. There are cases where the business may be sold for a multiple of one or less, or even four or higher. In rare cases, businesses that are well-run and in a growing market can be sold for as much as seven times their earnings.

What is the average sale price of small businesses?

Buyers should think of purchasing a small business as if they were purchasing a job. Generally, businesses that the owner is actively involved in will be sold between two and three times the annual earnings of the company. For example, if a business earns $100,000 yearly, it would likely be sold for $200,000-$300,000.