Chapter 15: Valuation & Positioning for Sale - The Math That Matters

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VALUATION AND POSITIONING FOR SALE.

You might not be looking to sell your company yet, but there are a variety of reasons having a good idea of how the valuation process works will help you as you progress as an entrepreneur.

If you’re ever looking to bring on partners, raise money for the brand, or buy out a partner if one wants to leave early, having a solid valuation model can make a world of difference.

1. What is a “valuation” and why is it important?
2. What is EBITDA and how can you use it?
3. When to chose between profit & growth. 
4. How to set your business up for a higher valuation.
5. Options on structuring the deal and different payout models.
6. Why you should calculate the inventory price separately from the sale price.

This PDF might be a little dry because it deals with so many numbers, but I promise you the information in here can make a HUGE impact in how much you’re able to sell your company for later.

If this is your first exit, the info here will be worth at least $1,000 per minute that it takes you to read. 

The whole goal here is to make the profit on the sale as big as possible, while still maintaining the growth trajectory of the company. 

In order to do that we need to show a high EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), or basically what most people would define as the “profit” of the company, while still maintaining the company on an upward trajectory. 

Typically companies are valued on a multiple of their net profit, or EBITDA, but that multiple can vary from 1 to 70 x depending on the type of business & a variety of other factors.

Total guide is 6 pages long and includes a Checklist Worksheet on Page 6.