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What exactly is EBITDA?

As you get ready to sell my business Baldwin Park, you may come across the abbreviation EBITDA. What does it mean and why should you read more about it? At So-Cal Business Brokers, we make the point of ensuring you understand every term that comes your way in a business sale. EBITDA is one of the most common terms. Let us take a look at what it means and its impact on the sale of a business.

EBITDA is simply the abbreviation for earnings before interest, taxes, depreciation and amortization. With the use of your business’ EBITDA, our business brokers in Los Angeles will be able to develop a fair market value of your business. We use EBITDA to eliminate the non-operating costs which are unique to your business while at the same time allowing you to focus on the profitable operation of your business. At So-Cal Business Brokers, we have learnt that the use of EBITDA is very important more so when you want to compare businesses in various industries or in different tax brackets.

But how exactly is EBITDA used in a business valuation? This is the most obvious question you will have when you want to sell my business Baldwin Park. Here is how we use it.

With EBITDA, our business brokers look at the qualitative factors of your business such as its location or if the owner is absent from the daily operations as is the case in similar businesses we have sold in the recent past. We use this qualitative data to come up with a multiplier for the business that is then multiplied by EBITDA to get the fair market value.

Business valuation, even using EBITDA, is not easy. It is not something you should try doing on your own. The most difficult part is the evaluation of qualitative factors. A trained eye is needed for this. The good news is that we at So-Cal Business Brokers have transactional professional who will evaluate and identify the qualitative factors correctly.

Do you need a more thorough business valuation or simply want to learn more about EBITDA? Give us a call today. We have sold all manner of businesses in various industries. We have the resources needed not only to help you price your business correctly but also to help you close fast and at maximum profit. Schedule a free no-obligation consultation with us now. We love hearing from you.

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