Business Sale Value
Business sale value data is published rarely and one of the few public data sets which is available free of charge can be found on the website at www.buyabusiness.com.au.
The buyabusiness.com.au website has a chart which compares 50 different small, medium and large industries, showcasing various data sets on business sale value.
The site demonstrates a typical sale price, a typical owner driven profit and a typical return on funds invested percentage. (that is, the profit divided by the total sales price and expressed as a percentage).
The www.buyabusiness.com.au website also shows a typical sale price and under management profit (after allowing $100,000 per annum for an owners executive labour, or the same amount for a manager to be installed in the business to replace the owner). The business sale value is then represented as an ROI percentage where the adjusted under management profit is divided by the sale price and then expressed as a percentage.
Where such businesses have an under management profit exceeding $500,000 the site also expresses a capitalisation rate as a multiple of profit (EBITDA) . For example an engineering business with a net profit under management of $1 million will have an ROI of 25% which equates to a business sale value of $4 million. This can also be rationalised as an EBITDA of 4.0 times profit.
In business sale value terminology what is EBITDA? EBITDA is earnings before interest, depreciation and amortisation.
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