Business valuation based on average of last 3 years

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from Murdoch University
in Chicago, IL, USA

4yrs ago

Business valuation based on average of last 3 years

Hi all,

I would like your thoughts and experiences with a valuation. I'm currently looking at a business that acheieved the following EBITDA:

2018 600k
2019 $1.3MIL
2020 $2.3MIL
2021 $2.3MIL (Dec is forecast)

Would you average 2019, 2020 and 2021 to get the EBITDA or are the last two years consistent enough to use $2.3MIL as the EBITDA?

I am asking myself "how would the banks value this"? Thank you in advance for your help.

0 Likes

323 Views

reply by a searcher 4yrs ago
from The University of Chicago in Washington, DC, USA

It's also tough to look at these figures in a vacuum. I would also consider the industry. A $2.3m EBITDA business with 4x growth in industry A could be valued (very) differently than a $2.3m EBITDA business with 4x growth in industry B. This plays into the future cash flow point but something else to think about.

reply by a professional 4yrs ago
from University of Southern California in North Palm Beach, FL, USA

Beware of goodwill, especially if its basis is the owner’s personal relationship with the company’s C.E.L.B.S. ™. To what degree can you reasonably expect to match or surpass the quality of the seller’s business relationships with the company’s customers, employees, landlord, bank and suppliers? (The IRS defines goodwill as the difference between the selling price of a business and the value of the tangible assets buyers purchase.)

Above covered more in my book: How to Buy the Right Business the Right Way redacted