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How to value a small business

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How much does a seller want? How much has a seller invested in their business? How much does a seller need to put their daughter through college? These are all incorrect ways to value a business that sellers often use to calculate price.

The best way to value a business is to determine how much it will make for a future owner, then multiply that by a “multiple” of what similar businesses have sold for.

The good news is that the True Owner’s Benefit is more than what’s on the tax return, and comparables for similar businesses are readily available.

Neal Isaac, VR Business Brokers

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