Business valuation is what a reasonable buyer would actually pay. Private companies are hard to value because they don't trade publicly and lack transparent financial history. Valuers use concrete metrics like revenue, net income, SDE, and EBITDA to anchor the number in reality.
Yeah. So obviously there is a lot of misunderstanding about valuation. I mean, ultimately valuation is about what a reasonable buyer's going to be willing to pay for that business. Yeah. And that's tricky in the private world because nobody has an established market. There's no trading stock. There's no financial information for the last 5 or 10 years that you can easily access. So it's a lot harder to pin down a number, but clearly that has to be tied to some sort of objective reality. What I would say is there are clearly objective data, revenues, net income, sellers' discretionary earnings, EBITDA, earnings before interest, taxes, and amortization, and multiples of those.
How Can You Maximize Your Business Value Before Selling? with Randy Katz Video
