Short presentation on valuation to MBA class.

1. Business Valuation Presented by: Matthew Waymire CPA United Business Brokers Phone: 702-932-0992 https://www.linkedin.com/e/fpf/18486908 Email: Matt@UnitedBusinessBrokers.com

2. Basic of Valuation Simple Equation Cash Flow X Multiplier = Value

3. What is cash flow? 99% of the time it is a variation of EBITDA

4. What is the multiplier? The inverse of the discount rate. The US Stock Market is trading at 16.6 times earnings or a rate of return of 6% Small Privately held business: A multiplier of 2.38 1 divided by 2.38 Or 42%

5. What are some items that affect the multiplier? Quality of Books and Records Growth Potential Quality of Competition In Place Quality Management In Place Quality Workforce In Place Procedures Intangibles Know How Patents etc.

6. What You Need to Understand About Selling Businesses In Order to Actually Sell Your Business It has to make sense for the buyer to buy The only real valid method of valuation is finding out what someone will actually pay for the business

7. To Sell your Business You Need to Anticipate Where Your Potential Buyer is Coming From For most business with Seller’s Net Cash Flow (SDE) under $500,000 you will be dealing with a financial buyer For businesses with Seller’s Net Cash Flow over $500,000 you may begin to deal with Strategic and Investment Buyers.

8. All Financial Buyers Need: A reasonable salary Money to pay the acquisition loan A cash return on the down payment Many are forced Entrepreneurs. They are buying a Job

9. What Financial Buyer’s Mentally Want: Control over destiny Job for life Will not be downsized Opportunity to make more Earning potential Build value in an asset Maybe the buyer will sell in several years?

10. All Investment buyers want: Very high rate of return on their money As low risk as possible On-going management

11. All Strategic Buyers Want Vertical or Horizontal Integration Economies of scale Price limit (in general) for publically traded companies = stock multiplier for the company Roll ups