Business Valuation Report
June 18, 2025
Speed Pro
Report Generated For
Karl Fick
June 18, 2025
Speed Pro
Report Generated For
Karl Fick
Business Valuation Report
What is a Business Valuation Report?
Business Valuation Report (BVR) is an informal, non-binding estimate provided by a business broker or intermediary to help determine the potential market value of a business. It is often used by business owners who are considering selling their business, buying a business, or seeking financing. While a BVR is not a formal appraisal, it provides a ballpark estimate of what a business might be worth based on various factors. Here's what a Business Valuation Report typically includes:
- Review of Financials: The broker will analyze the business's financial statements, such as profit and loss statements, balance sheets, and tax returns, typically for the past three to five years.
- Industry Analysis: The broker will look at trends in the industry, competitive factors, and the performance of similar businesses in the market. This helps contextualize the business's value within its specific market.
- Market Conditions: Brokers will consider current market conditions (e.g., demand for businesses in the industry, economic factors) and how these may impact the value of the business.
- Business Assets and Liabilities: The broker evaluates the physical and intangible assets of the business (e.g., equipment, intellectual property, goodwill) and any liabilities that might affect the value.
- Comparable Sales (Market Comparisons): The broker will look at sales of similar businesses in the same industry and region to gauge a comparable price.
- Multiples and Valuation Methods: The broker may apply different valuation methods, such as the earnings multiple, asset-based valuation, or discounted cash flow, depending on the nature of the business and the available data.
The BVR is typically less formal and less expensive than a full business appraisal, which requires a certified appraiser. While a BVR gives a reasonable estimate of the business's value, it's important to remember that it is subjective and based on the broker's professional judgment, not a precise market value.
A Business Valuation Report is often used to help business owners set a reasonable asking price when selling or decide whether to pursue other options like securing financing or finding an investor. However, if a formal transaction is taking place, such as a sale, many buyers or lenders may still require a full business valuation from a certified appraiser for greater accuracy.
Financial Analysis
The valuation of a business begins with a thorough analysis of its financial statements, which are typically provided by the business owner. This process involves reviewing the profit and loss statements to assess the company's financial performance, making necessary adjustments to determine the business's true earnings, and conducting an in-depth evaluation of the balance sheet to understand its financial position.
It is essential to recognize that financial analysis is a dynamic process, subject to refinement as additional information becomes available. This ensures the valuation reflects the most accurate and comprehensive picture of the business's financial health and earning potential.
P&L Recast
This recast shows the business historical 12-month periods side by side to show trends on growth, expenses, and profit.
Revenue
Percentages are of
Total Income
Cash Basis
Cost of Goods Sold
Percentages are of
Total Income
Cash Basis
Expenses
Percentages are of
Total Income
Cash Basis
Adjustments and Normalization
Once the financials have been recast the next step is to adjust or normalize the financials to show the earnings power of the business.
EBITDA Adjustments
Percentages are of
Total Income
Cash Basis
SDE Adjustments/Addbacks
Percentages are of
Total Income
Cash Basis
Adjustment Justification
- EBITDA - To find EBITDA, Interest, Depreciation, and Amortization are added to Net Profit
- Seller's Discretionary Earnings (SDE) - Reflects one full time working owner's pay and benefits. Each Add Back is considered discretionary in nature
- Bad Debt
- Owners Pay
- Replacement Cost
Balance Sheet Analysis
The balance sheet provides a comprehensive snapshot of the company's financial position, highlighting its key assets and liabilities. This analysis is crucial for understanding the company's liquidity, operational efficiency, and financial stability.
Assets
In assets section, the balance sheet reveals the amount of cash on hand, the value of equipment, inventory, and other significant assets that may impact the company's valuation. It also includes the fair market value (FMV) of equipment, offering insights into asset depreciation and potential resale value.
Liabilities
The liability section outlines the company's financial obligations, such as debts and accounts payable, which are vital for assessing risks and determining net asset value. A thorough review of the balance sheet also aids in calculating critical metrics like working capital and proceeds from a potential sale.
Valuation
Overview
When determining the value of a business, there are two primary approaches commonly used: the Asset-Based Approach and the Market-Based Approach. Each method offers a unique perspective on valuation, depending on the nature of the business, its assets, and its financial circumstances. The Asset-Based Approach focuses on the company's tangible and intangible assets, while the Market-Based Approach leverages comparable market transactions to estimate a fair value. Below, we explore each approach in detail, outlining when and why they are most appropriate.
Asset-Based Approach
The asset-based approach determines a company's value by calculating the book value of its tangible and intangible assets listed on the balance sheet (e.g., inventory, supplies, fixed assets) and subtracting liabilities. In simple terms, this approach reflects the amount of money that would remain if the company were liquidated.
When to Use the Asset-Based Approach:
The asset-based approach is particularly appropriate under the following circumstances:
- Liquidation or Business Closure – The company is considering liquidation or going out of business.
- Lack of Earnings History – The company has no established earnings history.
- Unreliable Earnings Estimates – The company's earnings cannot be reliably projected.
- Dependence on Competitive Contracts – The business operates on inconsistent or unpredictable contracts without a stable customer base (e.g., construction companies).
- Limited Value from Intangibles – The company derives little to no value from labor or intangible assets (e.g., real estate or holding companies).
- High Liquid Asset Composition – A significant portion of the company's value lies in liquid assets or other investments, such as marketable securities, real estate, or mineral rights.
In summary, the asset-based approach is suitable for businesses where the majority of value resides in tangible assets, or for those not generating sufficient returns to justify intangible elements like "excess earnings" or "goodwill."
Market-Based Approach
The market-based approach evaluates a company's value by analyzing recent sales of comparable businesses or assets, adjusting for key differences. This method is similar to the "market comps" approach used in real estate to determine property listing prices.
To estimate the Most Probable Selling Price (MPSP) of a business, the valuation process considers transaction data for businesses of similar size and industry. Adjustments are then made based on qualitative factors provided by the report's user, including:
- Client Concentration – Reliance on a few major clients.
- Growth Opportunities – Potential avenues for business expansion.
- Management Structure – The company's leadership and operational efficiency.
A market-based valuation provides a realistic expectation of what the business might sell for in an open, competitive market, based on recent transactions of similar businesses.
Asset-Based Approach
Establishing an Asset-Based Approach
To begin the asset-based approach, we analyze the balance sheet, focusing on Current Assets and Liabilities. This review provides the foundation for determining the business's net asset value (NAV).
Assets
Liabilities
Step 1: Examine Assets
The balance sheet highlights the following key assets:
- Cash on Hand
- Inventory
- Equipment
- Vehicles
- Accounts Receivable (A/R)
Asset Value Adjustments
To reflect the fair market value (FMV) of equipment and account for depreciation, we apply a standard 50% reduction to the cost value of equipment. After adjustments, the estimated FMV of all included assets totals:
Step 2: Identify Liabilities
The next step is to account for all liabilities listed on the balance sheet, which include:
- Accounts Payable
- Payroll Liabilities
- Long-Term Loans
The total liabilities of the business are calculated to be:
Step 3: Calculate Net Asset Value (NAV)
To determine the Net Asset Value, we subtract the total liabilities from the fair market value of the assets:
Conclusion
This value reflects the adjusted asset values after accounting for depreciation and the deduction of all liabilities, providing a clear picture of the business's net worth.
Market-Based Approach
The market approach is the most common method for selling a business. This approach involves analyzing the business's earnings using standard calculation methods and applying a multiplier derived from comparable businesses that have recently sold. By leveraging historical performance and market data, the market approach determines the price a willing and able buyer is likely to pay for the business.
Earnings are pulled from the financial analysis reference earlier in this report.
Step 1: Earnings Calculation
EBITDA Adjustments
Percentages are of
Total Income
Cash Basis
SDE Adjustments/Addbacks
Percentages are of
Total Income
Cash Basis
After establishing historical earnings through financial analysis, further refinements are applied to account for fluctuations over time. To present a more stable and reliable representation of the business's earnings, a weighting is assigned to the historical periods. This weighting emphasizes consistent trends and mitigates the impact of irregular or atypical performance, providing a clearer picture of the business's earning potential.
Once earnings have been determined, comparable data is gathered from multiple reliable sources to identify similar businesses that have recently been sold.
Step 2: Comparable Data
This data is analyzed to highlight transactions involving businesses of comparable size, industry, and financial performance. Adjustments are then made to account for differences, ensuring a more accurate and relevant comparison. This process helps establish a realistic benchmark for the company's value based on actual market activity and trends.
Search Criteria
| Summary Data | Transactions | Max | Min | Mean | Median |
|---|---|---|---|---|---|
| Sales Price | 21 | $2,400,000 | $868,190 | $1,524,795 | $1,475,000 |
| Annual Gross Revenue | 21 | $4,000,000 | $800,000 | $2,144,495 | $1,979,495 |
| SDE | 21 | $562,838 | $411,699 | $474,802 | $470,438 |
| EBITDA | 20 | $479,068 | $258,000 | $378,065 | $375,589 |
| SDE % of Revenue | 21 | 60.38% | 12.57% | 25.37% | 24.56% |
| EBITDA % of Revenue | 20 | 48.00% | 9.82% | 20.02% | 19.38% |
| Multiple of Revenue | 21 | 1.76 | 0.28 | 0.80 | 0.82 |
| Multiple of SDE | 21 | 4.39 | 2.11 | 3.19 | 3.18 |
| Multiple of EBITDA | 20 | 5.08 | 2.79 | 4.01 | 4.08 |
Most Likely Sales Range
At Dealonomy we use a range of value method. This ensures that sellers get the best selling price that the market determines.
Step 3: Marketable Range of Value
The range of value reflects a median multiple, representing the most likely selling price for the business. After completing a comprehensive data analysis, Dealonomy assigns a minimum and maximum price range to position the business effectively in the marketplace.
Based on the analysis of all relevant data points,
Dealonomy suggests a value range between:
$1.9M to $2.6M
Most Likely Sales Range
Bottom 5%
Next 20%
Middle 50%
Next 20%
Top 5%
$1.9M
Min Offer
$2.1M
Most Likely
Sales Price
$2.6M
Max Offer
$1.6M
$2.4M
After determining the asking price, we evaluate the deal's market viability by modeling a typical financing scenario.
Step 4: Financing Analysis
Using the asking price and earnings, we apply a standard SBA loan structure and terms to calculate payment amounts and the Debt Service Coverage Ratio (DSCR). Lenders generally seek an average DSCR above 1.5, as it indicates the business generates sufficient earnings to comfortably cover its debt obligations.
Business Acquisition Details
| Acquisition Value | $2,142,000 |
| Adjusted SDE | $673,512 |
| Acquisition Multiple | 3.18X |
Financing Structure
| Primary Loan | 90.00% |
| Seller Note (Seller Note) | 10.00% |
| Total Loan | 100% |
Primary Loan Payment Calculator
| Sale Price Coverage | $1,927,800.00 |
| Down Payment 10% | $192,780.00 |
| Loan Amount | $1,735,020.00 |
| Interest (in Years) | 9.00% |
| Term (in Years) | 10 |
| Payment (Annual) | $270,350.97 |
| Payment (Monthly) | $21,978.50 |
Seller Note Payment Calculator
| Sale Price Coverage | $214,200.00 |
| Down Payment (Variable NOT Adjustable) | $0.00 |
| Loan Amount | $214,200.00 |
| Interest (in Years) | 6.00% |
| Term (in Years) | 10 |
| Payment (Annual) | $29,102.92 |
| Payment (Monthly) | $2,378.06 |
| Debt Service Coverage Ratio Calculator | 2022 | 2023 | 2024 | (Projected)2025 |
|---|
| Seller's Discretionary Earnings (SDE) | $364,300.99 | $357,861.00 | $567,938.00 | $841,466.00 |
| Buyer's Salary | $75,000.00 | $75,000.00 | $75,000.00 | $75,000.00 |
| SDE After Buyer's Salary | $289,300.99 | $282,861.00 | $492,938.00 | $766,466.00 |
| Debt Service | $299,453.89 | $299,453.89 | $299,453.89 | $299,453.89 |
| DSCR | 0.97 | 0.94 | 1.65 | 2.56 |
| Seller's Discretionary Earnings | $364,300.99 | $357,861.00 |
| Buyer's Salary | $75,000.00 | $75,000.00 |
| SDE After Buyer's Salary | $289,300.99 | $282,861.00 |
| Debt Service | $299,453.89 | $299,453.89 |
| DSCR | 0.97 | 0.94 |
| Seller's Discretionary Earnings | $567,938.00 | $841,466.00 |
| Buyer's Salary | $75,000.00 | $75,000.00 |
| SDE After Buyer's Salary | $492,938.00 | $766,466.00 |
| Debt Service | $299,453.89 | $299,453.89 |
| DSCR | 1.65 | 2.56 |
| Average DSCR | 1.53 |
Seller's Proceeds Model
Once the business valuation is determined, the final step is to present a hypothetical proceeds estimate that the seller could expect if the transaction were to close on the date of the provided balance sheet. This calculation accounts for adjustments such as liabilities, transaction costs, and other relevant factors, offering the seller a clear picture of their potential net proceeds.
Proceeds at Closing
AmountFront Pre-Tax Proceeds
Proceeds Post Closing
AmountClosing Pre-Tax Proceeds
Total Proceeds Over Time
AmountProceeds Over Time
Summary
To recap the Business Valuation Report, based off of the information provided our analysis shows:
Net Asset Value (NAV):
$0The Net Asset Value of the business is estimated at $0. This value reflects the adjusted asset values after accounting for depreciation and the deduction of all liabilities, providing a clear picture of the business's net worth.
Market Value:
$2,142,000The Market Value of the business is $2,142,000 based on historical earnings and comparable data.
Dealonomy Range:
$1.9M to $2.6MThe Dealonomy Range shows a value range for the business to be placed on the market between $1,921,000 and $2,562,000.
For any questions please reach out to:
Dusty Block
dusty@dealonomy.com
830-224-2100
How It Works
Disclaimer: This report is NOT an appraisal and is only intended to provide an approximate calculation of value based upon the information received from you. Dealonomy does not represent or endorse the accuracy or reliability of any advice, opinion, statement or any other information displayed or distributed through this report or its website. The estimates and data contained herein are made using the information you provide, publicly available information and data, and rules of thumb for different industries. Dealonomy has not audited or attempted to confirm this information for accuracy or completeness. This report should not be used to obtain credit or for any other commercial purposes. This business valuation is for information purposes only. Use of this report is at the own risk of the participant. The participant takes full responsibility for the provided inputs, assumptions and calculations of the report. Dealonomy assumes no responsibility nor liabilities for any consequences from the calculated results and provides no assurances of the applicability or accuracy of the valuation results for your company. The results of this valuation do not provide “safe harbor” status for IRC 409a purposes and do not serve as an independent qualified appraisal or valuation opinion. This report is the intellectual property of Dealonomy. Your use of this report and the information provided herein is also subject to the online terms of use and privacy policy of Dealonomy.