It always helps to know the value of your company. Along the way, you may be approached by potential investors, or you may want to raise capital. You may decide to use shares in your company to acquire another business or to entice prospective employees through an employee stock plan. Equity in your company could be a key part of any executive compensation package. Either way, you should always have a current valuation of your business.
Estimating the value of your business is a process that requires expertise, as you want to be as precise as possible. There may be consequences if you overestimate the value, just like you could be leaving money on the table if you underestimate it.
You should enlist the help of a professional to value your business, whether it is an accountant or an investment banker. They may use one of a number of calculations to reach their conclusion. Valuation methods may include:
- Assigning a multiple to your company’s EBITDA
- Assigning a discount factor to your company’s future cash flow
- The enterprise value of your debt plus equity minus the cash not used in operations
- The market capitalization of your shares
- Use a multiple of your company’s revenues
There may be other things that can impact the value of your company, including your goodwill and brand value. You should consider meeting with a business valuation expert, as you may have a need to have valuation information readily at your fingertips.
Contact a Miami Business Law Attorney Today
Attorney Daniel D. Diaz can work with your business on complex transactions that require the help of an experienced practitioner. We are your trusted business partner in South Florida. To speak with an attorney, call us today at 785.256.3299 or send us a message online.
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