Value your business

The first step in creating a succession plan for your business is understanding its value today.  This will allow you to protect what you have built while you continue to grow.  The valuation of a financial advisory business is focused on the client relationships and the future value of the revenue generated from these relationships.  It also factors in the overall health of the business and its sustainability beyond you the owner.  When starting a valuation, some of the information you will want to collect and consider are revenue, assets, client demographics, fixed and variable expenses.  

There are also different methods for valuing the business:

· Multiple of Revenue – Estimates the value of your practice based on your gross revenue.

· Multiple of EBITDA – Estimates the value of your practice based on EBITDA, or earnings before interest, tax, depreciation and amortization. Essentially, adds these four items back to your operating profit.

· Multiple of EBOC – Estimates the value of your practice based on EBOC, or earnings before owner compensation.

· Discounted Cash Flow – Estimates the current value of your practice based on the projected future cash flows from the business.

Would you like to have a complimentary initial valuation based on a multiple of revenues?