In this posting, I continue the discussion about how attorneys help buy and sell companies as well as how other professionals aid in facilitating a company sale.
If you seek to buy or sell a company, one of your first questions is what’s the value of the business? That’s a question a business broker can help you answer. Clayton Wendt, a business broker with Sunbelt Business Brokers in St Paul, Minnesota, shared with me his thoughts on how to set a price for the sale or purchase of a business.
When valuing a business, Clayton divides companies into separate tiers. A main street business might sell for of up to about $1M and is valued according to a multiple of the seller’s discretionary earnings. A mid-market company might sell for a price of up to $7 - $8 Million and is valued at a multiple of EBITBA (Earnings Before Interest, Taxes, Depreciation and Amortization). Clayton also explained how copyright, trademarks, and patents owned by the company get worked into the valuation.
(Click the link below to listen to my 10-minute conversation with business broker, Clayton Wendt.)