What is my business worth? Don't be the Fisherman
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What is my business worth in Florida? Get Real and Don’t be the Fisherman
Just the other day I was in my CPA’s office and one of the partners saw me and took me to the break room. Seems one of his clients was paying a outside firm a fee to tell him what his business was worth. I’m sure if you are a business owner of any duration of time that you have gotten: direct mail, faxes (yes there are still faxes), email, and cold calls all soliciting you for the opportunity to tell you what your business was worth and to “oh by the way” receive a handsome fee.
In this particular case the CPA was asking me if I ever saw a 5 multiple…..in honesty I had to tell him no. Further qualifying it I said….”5 multiples are for businesses getting netting well over 1 million dollars in ebitda and even then that is rare indeed”. What was so funny about the conversation was that by this time 3 other CPA’s had joined in and we actually went to my database and started gold mining for data to validate the discussion. Never….never did we see in the years of data we looked at an example of a 5 multiplier.
So it further begs the question…with all the facts in the hands of a seller why would he pay to be told a lie (or at least a half-truth). Well, that is the million dollar question….but it goes to human nature. We all want to believe the best and Entrepreneurs especially want to have a positive outlook. You see it is in our nature to want to believe only the best…but that is the folly in business and in life.
The danger of this type of attitude when selling a business is to place the best outcome in peril. It is much like sailing a ship into a storm when you are warned of its dangers. Much like the fishermen in The Perfect Storm, business owners who ignore the forecast put at risk entire enterprises.
The business owner who pays for a valuation telling him of strong winds and following seas when the conditions and course clearly say otherwise is serving his own ego.
Fortunately, in Florida the marketplace has collected data that year over year has proven to ring true and is predictive of results. Interpreted by an experienced hand with proven results you can set yourself up for success and positive results.
For more visit me at https://www.yourfloridabusinessbroker.com
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