Encore Financial

06/07/2024

Test drive our exit readiness assessment today.

Absolutely free and comes with a complimentary breakdown.

06/05/2024

What is Minimum Viable Sales Price?

Definition: A calculation of the minimum financial benefit a seller should realize in order to fund their future goals.

Example: A seller wants to fund their retirement with the sale of their business. The goal is to have $100k of income annually. If we use the 4% rule, we could assume that the seller would want a bucket of money equal to $4M.

The calculation gets more complicated when accounting for taxes, deal structure, and other sources of income.

A licensed financial advisor will be able to run a Monte Carlo simulation to see what a seller would need to sell their business for to fund their goals. Anything over the minimum viable sales price is icing on the cake.

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06/03/2024

What is SDE?

Definition: SDE represents the total financial benefit accruing to a business owner, including pre-tax profit, owner's salary, personal expenses, and non-recurring expenses.

SDE is used instead of EBITDA for smaller owner-centric operations.

Example: The SDE for a small business is calculated by adding the owner's salary(how much you pay yourself), non-business-related expenses (like your cell phone or client meals), and any one-time expenses (like a new work truck) to the pre-tax profit. For instance, if a business's pre-tax profit is $150,000, and the owner's salary is $50,000 with $20,000 in personal expenses and $10,000 in non-recurring expenses, the SDE would be $230,000.

SDE represents the total financial benefit taken by the owner from the business.

Entrepreneurial buyers (under $3M) want to see the company's pre-tax profit but also the owner's salary, personal expenses, and discretionary spending. This holistic view provides a clearer picture of the business's earning potential and its value to the owner.

06/01/2024

Tips on Valuing a Sandwich Shop

Many great operators have been expanding menu options. Think innovative menus plus special catering lunch deals.

COGS should be sitting at about 28% with labor between 20-30%.

Your revenue per employee should sit at $60,000 per year with an average wage of $16,400.

The general rule of thumb for pricing is 2x SDE plus inventory.

Recent Private Market Sales Data
Under $1 Million in Sales – Average of 1.67x SDE
$1-5 Million in Sales – Average of 2.43x SDE
Over $5 Million in Sales - Average of 4.98x SDE

Are you interested in benchmarking your business? Message us.

05/30/2024

Tips on Valuing and Growing a Land Surveying Services Business.

Superb future growth rates are expected. Why?

Real estate market volatility is likely to subside with the fall in interest rates. Surveyors can take advantage of governmental infrastructure investment. With new tech like drones in the mix, a well-positioned business can sell for more.

The average number of employees is 4 with an average wage of about $20,000.

Special care is to keep operating profit around 10%. Look to include vending machines and consider diversifying into batting cages or a chipping area.

Recent Private Market Sales Data
Under $1 Million in Sales – Average of 3.72x EBITDA
$1-5 Million in Sales – Average of 3.86x EBITDA
Over $5 Million in Sales - Average of 12.65x EBITDA

Are you interested in benchmarking your business? Message us today.

05/28/2024

05/24/2024

According to the Exit Planning Institute, building sellable value in a business entails a step-by-step process.

05/22/2024

Looking to sell a Massage Envy (Franchise)

Valuation General Guidelines:
43% of Net Sales

Historical Median Sales
Under $1 Million in Sales – 2.65x EBITDA
$1-5 Million in Sales – 5x EBITDA

Seller’s Tips: Typical investment is $614,000 to $927,000. Finance through the franchisor.

At Encore Financial, we work with business owners to help prepare their businesses and themselves for an eventual exit. Let's talk.

08/22/2023

Yes, the stock market is like a rollercoaster.

If you are on a rollercoaster and it gets really scary, do you jump out?

I wouldn’t.

08/14/2023

Most small and medium-sized businesses don't conduct regular, periodic valuations.

Why?

Certified valuations are extremely expensive. 10s of thousands of dollars.

As part of our regular services, we provide non-certified valuations at a fraction of that cost.

08/12/2023

Ready to sell your business?

FYI, only 20-30% of businesses are able to be sold.

so then what is your exit plan?