Helps with Business Pricing
- Accurate & Easy to Use
Generates Professional Pricing Reports
- Creates Sixteen-Page Pricing Reports
- Generated Reports are Easy to Understand & Explain
Relied on by 300+ Business Broker’s Nationwide
- Effective Marketing/Listing Tool
Utilizes Traditional Business Brokerage Valuation Methods
The Multiple of Discretionary Earnings Method was originally developed to value small “main street” businesses. It has been adapted by business brokers to value both small and medium sized businesses, i.e., up to several million dollars in revenue. This method is also used by many business appraisers for smaller companies.
The Market Data Method based on transactions of businesses in the same industry/SIC code or industry rules of thumb, is the most direct method of valuing privately held companies. The Market Data Method is used by both appraisers and brokers. This method uses multiples observed in the sale of similar assets in the market. For example:
Value = Price/SDE
Value = Price/Revenue
Value = Price/EBIT
Value = Price/EBIT
The Buyer’s Test Method determines the maximum value at which the business can:
Pay the buyer a reasonable salary;
Provide the buyer a reasonable return on his/her down payment;
Cover annual capital expense;
Cover annual debt service with the required debt coverage ratio.
While the valuation methods used in ValuTrax™ are accepted by the valuation community, business brokers and other professionals who routinely set listing / selling prices for businesses are not required to meet the same standards as formal appraisal practices. ValuTrax™ is intended for use by such professionals.
The application of the methods in the ValuTrax™ pricing model along with years of experience in evaluating privately-held businesses, although not considered a formal valuation or appraisal, in our opinion provides a reasonable basis for estimating the likely Selling / Listing Price of a business.