With regard to simple valuations, here are some statistics surrounding private businesses might benefit from thinking about.
If we take a business that generates $10 million in sales and that has an EBIDTA of 10 percent, a sale might have the following result:
|ebidta of 10%||$1,200,000|
|sale price of 5.0 x ebidta||$6,000,000|
|taxes and expenses on business sale – 35%||$2,100,000|
|net proceeds from sale available to invest||$3,900,000|
Naturally, this assumes no bank debt, and you own 100% of the stock.
It also assumes you, as seller, do not have to take back seller notes (partially financing the sale), which at this level today is quite common.