Today's episode of the podcast, Robert Hirsch from Freedom "Factory discusses 3 Ways to Maximize Your Company's Value", frequently asked by business owners, and people who want to start a business.
Listen to the podcast, watch the video, or read the transcript below.
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What Does Freedom Mean to me to Sell my Business?
Transcript of Podcast
Hi, Robert Harris from Freedom Factory here again, and today I want to talk to you about the three ways to maximize the value when you go to sell your business. The first is to maximize your multiple, and what I mean by that is there are different multiples for different businesses and we can talk about what that looks like.
But for example, I had a company come to me to sell and its name was something excavation, and it started off being an excavation company, but in the last 20 years, it really turned into a construction company, but 80% of its revenues were construction. Now it turns out that multiples are this size business and multiples, meaning how much times earning is your company worth?
If your multiple is two and your earnings were $1 million, your company would be worth 2 million plus whatever your capital assets are. And so the excavation company, the multiple was roughly two to two and a half, but if it was a construction company, which it really was, is four and a half to five, so it changed the branding of the company. We changed the positioning and we were able to tell it in the construction multiples, not in the excavation multiples.
Point two is recasting your financials. Now you have to pay your taxes and you have your EBIDTA and your EBIT is designed to be minimized. And what we do is we do a pivot table and we translate that to seller's discretionary cash flow. And it accurately reflects all the cash and value that your company creates. And so by adding back your board meetings in Hawaii and maybe your health club memberships and your vehicles, et cetera, et cetera, et cetera, you really get a capture all that value. So recasting your financials is really important.
The third piece is maximizing your intangibles. And what I mean by that is when we have a buyer that comes to look at your company, they're going to ask questions. And if we have those questions answered beforehand and they say, well, how does the company work? And he said, well, it's A, B, C, and D, and we can send you the operations manual following this call, and he can get back to us with any questions. An approach like that is going to answer more questions and it's going to create, and let's say the multiple range was three to five times earnings, meaning if it was $1 million of earnings, if it were three to 5 million, when your intangibles are there, you're going to really get on the upper side and get a net over four, four and a half, five.
When everything's in disarray, you're really going to be on the lower end of that. So getting your intangibles in place is really important. And remember, when you go to sell your business, it's a team sport. If you need any help, just give us a call at Freedom Factory and we'd be happy to help you and walk you through the entire process.
Thanks for spending your valuable time with me. Please Like This Video and Subscribe to Our Channel and we'll see you soon.
Contact Freedom Factory
At Freedom Factory®, we have experienced and witnessed the explosive results of entrepreneurs aligning passion and purpose to create extraordinary value. However, most entrepreneurs have no idea how to maximize the value of their business and move on to the next chapter of their lives. That’s where we can help.
Freedom Factory® has radically disrupted the way high-growth, lifestyle companies are bought and sold, which historically was a horribly inefficient market. When I sold my first company in the 1990s, I went to several investment banks and sold my business to one of less than five companies they called. Looking back, I see exactly how much money I left on the table and knew that there had to be a better way. The bottom line is that entrepreneurs don’t speak banker, and bankers sure don’t speak entrepreneur.
https://tylertysdal.academia.edu/
Contact Tyler Tysdal at Freedom Factory
Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com/
Freedom Factory Managing Partners
Tyler Tysdal https://www.linkedin.com/in/tyler-tysdal
Robert Hirsch https://freedomfactory.com/about-robert-hirsch
Who is Tyler Tysdal?
Tyler Tysdal is a lifelong entrepreneur who first discovered the joys and challenges of self-employment at the age of 14. Tyler Tysdal was a collector and trader of baseball cards and his budding entrepreneurial spirit spurred him to create Triple T’s Sports Collectibles, a national mail-order trading card and memorabilia business that found a wide audience through ads in trade magazines. While market inefficiencies were numerous in this pre-internet era, a young Tyler Tysdal experienced his first big business win with $14,000 a month of profit result. A lot of money for 14. It hit him during a ride with his mom to the post office to mail dozens of card shipments: He would likely be an entrepreneur and investor the rest of his career.
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Additional News Sources:
Tyler Tysdal On How Business Brokers Can Help Sell Your Business
https://tricitydaily.com/tyler-tysdals-freedom-factory-teaching-entrepreneurs-secrets-of-selling-their-business-for-maximum-value/
Tyler Tysdal Discusses Key Reasons for Selling a Business
