By Matt Silasiri – Marketing and Business Development Manager
Watch this short video before reading further:
https://www.youtube.com/watch?v=d4vXr-Clvuw
In a nutshell, EBITDA is a measure of a business’s true earning power or cash flow. Like Paulie, says, “the true picture of a company’s profitability.”
Another common measure of cash flow is Sellers Discretionary Earnings or SDE. Which measure to use depends on how much cash flow your business generates. This is the first step when valuing a business, calculating the cash flow, and identifying which measure suits your exit path. Knowing the appropriate measure of cash flow is key to identifying a multiple, likely buyer and appropriate exit strategy for your business.
If you are thinking about exiting in the next few years but are unsure of the true earning power of your business, we’re ready to assist.
If you’d like to learn more about exit strategy, we created a video series for you- 24 Rules to a Successful Business Exit.
You can check them out here. These short videos are the ultimate quick-start guide of the exit process.
Questions about the exit process, or valuation? Call us today (612) 235-3511.
About Sunbelt Business Advisors of Minnesota
The Sunbelt Business Advisors Minneapolis office is the largest office in the Sunbelt network with a staff of over 50 advisors, associates, analysts, and business development representatives. In 2021 the firm was recognized by the International Business Brokers Association as the #1 firm in the country and the first firm in history to sweep all three first-in class awards. Sunbelt provides services to business owners interested in selling their businesses, assistance with merger and acquisition activities, complimentary business value assessments, and advice to business owners seeking to maximize their life’s work when they exit. The firm provides business brokerage and mergers & acquisitions services for companies with revenues from $500,000 to $150 million. More information is available at www.sunbeltmidwest.com (<Under $5 million revenue) and www.tnma.com ($5 – $150 million in revenue).
