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A Story about "Ed"

Similar to the Farmers Insurance tag line, our firm 'Knows a Thing or Two Because We've Experienced a Thing or Two.'

This is a story about "Ed" who is a composite of some of the sellers that we have 'experienced'. Ed owned a very profitable company with revenues of $3M. His CPA indicated that he had compiled earnings (EBITDA) of $1M and could expect a valuation of about $4,000,000 (4X).

Getting under the Covers to Find the Real Earnings.  Our first task was to 'peek between the sheets.' A few of the things that we discovered were:

  • There were only three folks in the office, but office expenses were well over $24,000 per year. We learned that these expenses were related to Ed's Costco Credit card (“you gotta eat you know”).

  • An expense for consulting was determined to be for Ed's mother who was in a nursing home ($10,000/yr) “She used to be our bookkeeper and knows a lot.”

  • A building maintenance expense for $3,000 per month related to the caretaker of the seller’s ranch "Somebody has to pay him.”

Ed Gets an Increase in Value and is a Happy Camper. The above adjustments resulted in $70,000 of increased earnings and an increase in value of $280,000 assuming a 4X multiple.

Ed was very happy with the 28% increase.

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What They Say About Us

"I can’t begin to express how grateful we are for your help and guidance with the sale of our business.  You managed to lay out every step we needed to do.  You found us the perfect buyer and held our hands to the very end. When we look back on the whole experience, we realize that it could have been a nightmare without you.  We felt as though you were always by our side to either answer questions or to just calm our nerves.  We would highly recommend you to anyone looking to sell their business. Your experience and knowledge in everything from valuation to marketing to execution of all the little details made all the difference."

Home Services Cleaning Business (Seller)