Sell Distribution Business – How Do You Value a Distribution Business?

When you are ready to sell distribution business, the number one thing you should do is hire the right support team. At So-Cal Business Brokers we believe we have the best team to help you sell your distribution business fast and for the best price. We have been in business for close to three decades now and we are able to anticipate most of the issues that can keep you from closing fast. What is more is that we will help value your business free of charge. Below are some of the methods used to value a business.

Tally the total value of assets

This is the most common approach in business valuation. Here you simply add up the total value of everything that your business owns. This should include both your inventory and equipment. You then need to subtract the total liabilities or debts. The final figure will give you a starting point when determining the value of your business. Our team at So-Cal Business Brokers will help with all this. We will also help value intangible assets as you get ready to sell distribution business. Contact us now to find out more.

Based on revenue

With this method, the valuation expert considers the total amount that the business generates in annual sales. With this amount in mind, our business broker will look at what businesses that have the same revenue sold for recently.

Earnings multiples

One of the best measure we probably use is that of using multiples of your distribution business’ earnings or the price to earnings (P/E) ratio. This helps estimate the earnings of your business for the next couple of years. If the P/E ratio is 15, for example, and the projected earnings is $200,000 per year, the worth of the business will be $3 million. We will help you with this calculation.

Discounted cash flow analysis

This is the approach used by Warren Buffet. Needless to say, this is a very complicated formula that considers the annual cash flow of a business and then projects that into the future and discounts the value of future cash flow to today. The calculation uses the ‘net present value’ calculation. While there are several Net Present Value calculators online, we highly recommend you use our team when you want to sell distribution business.

At So-Cal Business Brokers we understand that financial formulas are not enough when it comes to business valuation. That is why we use a combination of methods which include considering your business’ geographical location and considering your business’ strategic value. Contact us today to schedule a free consultation. We are always happy to hear from you.

Sell Distribution Business