How to Value a Private Company - Small Business Valuation 101

How do you value a private company? How do you value a small business with no public information available? What is the difference between a DCF valuation vs an asset-based approach vs comparable analysis approach and which one is most relevant for small businesses? Is EBITDA the best benchmark to use for busines valuation?

In today's video I will answer the above questions and share my approach to private company valuation. Valuation is more art than science and is subjective to the buyer's needs so when thinking about small business valuation, you need to anticipate what buyers are looking for as it will directly influence the valuation range used for the business. It is difficult to determine an exact value for a small business, instead you want to determine a range of value the business may sell for in the open market. This is the approach we use at Roblee Capital to assist business owners in determining their business value.

Click The Link Below To Purchase the Letter of Intent (LOI) Template For Asset-Based Acquisitions on the FinanceKid website. Thank you for your support!

If you have any other questions, please comment below. If you enjoyed the video and found it helpful, please like and subscribe to FinanceKid for more videos soon! If you want to reach out, contact me at;

If you are looking to sell your business and would like to learn more about Roblee Capital, please reach out to me for an introductory call. You can contact me through email or through my LinkedIn at;

Roblee Capital is a Toronto-based M&A Investment Bank focused on serving companies with revenues between $1MM to $100MM primarily offering sell and buy-side M&A services. We work with Canadian-based business owners looking to sell their lower mid-market business. If you are a Canadian business owner looking to sell or buy, please reach out so we can connect at the link below:

[illamaxilla]

You deserve 10 million followers for the quality of information provided. I wish YouTube rewarded for the "quality" of its content. This was amazing! Thank You!!

[diez]

Thank you, thank you! This is in my opinion the best M&A channel.

[lseul]

You are by far the most helpful finance channel/resource I have come into contact with. Phenomenal job. This is so helpful

[balagopaljayakumar]

Just wanted to appreciate the effort you put towards creating such informative videos!

[liliu]

High quality content! Thank you for sharing the information! I’m subscribing to your channel!

[karishmajay]

Thank you so much! I can’t tell you how much you have simplified it all to get us started in this entire process. Here’s to great success for you✨

[ggarciacota]

Great video with very clear explanation. Thank you very much for sharing your knowledge in a superb way.

[DograO]

Worth every penny of the YouTube Premium subscription! Great job on the video - very very helpful.

[derekcummings]

Great video!!!! I immediately subscribed to your channel!

[godlyconversations]

This is an excellent job! Thank you for sharing such high quality knowledge

[marcojosezgimenez]

Is it possible to get your slides? It adds so much value that I want to look at it more turn based

[TheXcelleratorLLC]

Quick question 🤔 regarding business valuations. Is there a way to use a business valuation to get a loan??

[ricecube]

Far better information than all the other vids out there thank you !

[sonerguney]

Very good. Can you please send the link for a download of thıs presentation. Thanks.

[zikizaki]

How would one come up with a value figure for really small businesses? For instance if, let's say, the guy owning the Deli at the corner approaches me and offers me his business at "a discount". Or if a friend wants to sell his limousine service (with just a few cars and only 2 years of business history) to me.

A DCF seems out of the question. But even a multiple based approach like you presented seems difficult to conduct as I’d assume there’s not really any reliable comp data to access.

[rohits]

Excellent, Thanks. When can I can expect the release of Part-2 ?

[ellendarlison]

What if you’re a small highly scalable tech business? For example - if you’re only $1M EBITDA - you would fall into the small business range of 4x - 6x multiple. Given value drivers you would warrant a 6x multiple / but isn’t this multiple still too low for high growth tech companies - therefore would the size criteria be less relevant in this example?

[carwoman]

What if there is no benchmark/multiple because you're in such a niche (though long lived) industry? There is no NAICS or SIC code for our industry.

[scotolivera]

Thanks a lot, Where can we find the EBITDA ranges as a resource ?

[dragonman]

Thank you. I am looking to buy a business from a boomer.