Buying or selling a business, making a stock offering, or taking on an equity partner to fund the next level of growth requires that you know the value of your business in the market place. It is increasingly common for managers to give away too much of their business in these important transactions because they lack the knowledge to set an accurate price and the confidence to stick to it in the give and take of negotiations. It is also confusing to be presented with the many ad-hoc methods that exist to value your business such as Triple the Net, Common Size, and others. It should be comforting to know that they are all wrong. Only one method based on valid financial theory can get you close to the real value of your business: Discounted Cash Flow.
What is of real value in any business is its future profit stream. In brief, Discounted Cash Flow tells you what your future profits are worth today. If I am a buyer of, or an investor in your business, my only question should be: What is the return on my investment (ROI) at the price I am paying to buy the right to your future profits?
We can help you understand the real value of your business as you navigate important equity transactions.