Three ways to value a business: the asset method subtracts debt from total assets; the market method compares it to similar businesses like car washes or dog groomers; the income method uses EBITDA multipliers and is what banks prefer.
You can— I want everybody to do this as homework. Go to Deal Hunter and ask it to give you the 3 ways that we can come up with valuations for businesses. And it'll, it should give you the 3 ways. One is called asset. It's called the asset method. Then there's the market method. And then there's the income method. Asset method takes all your assets, subtracts your debt, and gives you the value of the business. If you do a, if you do an inc— if you do a market analysis or a market method, —of valuing a business, you go based on what the business is. Say, for example, it's a car wash. You would go and find what the national average of car washes are being sold for. Then you would go to that MSA, or, you know, like the Phoenix market, and say, what are car washes in Phoenix selling for? And that's how you would come up with a roundabout market analysis. The market analysis is basically like the lowest used form because it's very vague. And it's really only helpful for like very unique niche-style businesses that, you know, Like being a poodle haircut designer, like that's a very niche business. And so your income might be very high and it could give it a false valuation on the income side. So you might go with just a market value and say that a niche dog groomer, and that way you could get a better value going that way. And then finally the income value. And that, that this is where you get into the multipliers of the EBITDA and all that. And it gets very detailed. This is the one that most every bank uses is the, the, uh, the income method. So if you go to Deal Hunter and ask it to explain those 3 methods to you, give you case studies and examples, um, you'll get a very good understanding of how to value these businesses that have real estate with them. Because you're gonna value the real estate and then you're gonna value the business.
