Value my business
May 25, 2022
by a searcher from Harvard University in Fort Lauderdale, FL, USA
Hello everyone,
I own a business and I'm curious to see what the community thinks that it's worth. Here are the key details:
Manufacturing business (really more "assembly" than manufacturing") in the automotive aftermarket space (auto racing specifically)
Asset-lite. We have only maybe $100k of equipment
Strong brand name
Products sold direct to consumer, to dealers, and distributors (roughly 50/50 split between consumers and dealers, dealers have roughly 15% price discount)
Lots of inventory parts, but only about 15 SKU's sold (although each SKU is prepared custom for each customer to their specific dimensions)
Average order value roughly $600
10 employees. 4 sales/office staff, 1 inventory, 5 production
2021 Revenue $3 million
2021 EBITDA (adding back my 60k salary) $830
No recurring nature to the revenue (some customers rebuy, but nothing contractual)
So that's the first question - what do you think we could sell for? The next question is - if we hit $2 million in EBITDA, do you think we would get a bigger multiple? What do you think that would be in this market?
The reason that I ask, is because to hit $2 million in EBITDA it's going to require us to invest several hundred thousand dollars into the business. I can do the ROI on a future cash flow basis, but I'm trying to understand how it will impact our future exit.
Thank you!
from The University of Chicago in Chicago, IL, USA
You should not loose the opportunity based on price as long as it is reaosnable and finance-able. 4x to 5x EBITDA (Say###-###-#### should be upper limit. Your net at exit is independant of what you pay (assumig no profit change).
If you can grow it to $2 M, you will get higher multiple; however, most PEGs do a lot more than just growing EBITDA. Once you get your arms around the business and meet obligations, after a short period, you should be able to get capital for growth with a good plan.
I have not heard of a buyer who reduces price to allow for growth.
in Tampa, FL, USA
Offer would most likely come in around $2,147,750 with $1,718,200 cash at close and $429,550 in Seller Note (depending on if SBA is used, some of that might be on Full Stand-by). As ^redacted mentioned, including inventory and net AR/AP based on 12-month averages.