Estimated Calculation of Value

Annual Net Income Per Financial Statements

Start with the net income from your latest set of full year financial statements. Financial statements prepared on the accrual basis of accounting will produce more accurate results but for this Estimate of Value you can use cash basis financials if that is all that you have.

Company Add-Backs

The Company Add-Backs are used to help you calculate Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA.This number allows the company to be evaluated based upon performance without the effect of financing decisions or tax situs.

EBITDA

EBITDA also allows a more accurate comparison of profitability between companies.

Adjustments to EBITDA

Adjustments to EBITDA reflect expenses that are either extraordinary in nature such as a one-time casualty loss that is not expected to be repeated in future years or are expenses deducted by a business owner that would not continue if the owner were to leave the business. Having a family member paid by the company that does not perform a business function would be one example of an Owner Add-Back.

EXTRAORDINARY ONE-TIME EXPENSES

The Multiplier by SIC or NAICS

These Standard Industry Codes or North American Industry Classification System code classifies businesses under certain industries in the United States. Different industries will have different multipliers based upon a variety of factors.

The overall health of a business will also have an impact on the multiplier that will be applied to the adjusted EBITDA number.By correcting inefficiencies, reducing risk or increasing company performance you can increase the multiplier resulting in a greater value of your business.

Estimated Business Value