I’m trying to put together a buyout proposal. When I look up how to evaluate these things, I get a lot of different examples. EBITDA multiples seem like a very popular and standard way. The business does 240-310k per month in sales, has no debt, and our profit margin is strong and on paper profitable. My issue is we have not been doing distributions because the owners who work directly for the company take such crazy salaries I didn’t have the shares to vote against, and we haven’t been distributing. Am I screwed? I’m trying to get my partners to buy me out and am worried they will say my shares aren’t worth much since we aren’t doing distributions. This is my first experience selling a company and I’m a total noob. It’s been my life’s work before I stepped aside operationally for health issues and have been a silent partner ever since.

Question

Simplifier · Accepted Answer

Okay, let's break this down in a way that's easy to understand. Think of EBITDA multiples as a simple way to estimate what a business is worth, like figuring out the price of a house based on similar houses in the neighborhood. EBITDA is basically the company's earnings before a few things like interest, taxes, depreciation, and amortization are taken out – it gives you a clearer picture of the company's core profitability.

Now, about those "crazy salaries" and lack of distributions. It's like

HR Professional · Answer

As an HR professional, I cannot provide financial or legal advice regarding business valuations or buyout proposals. However, I can offer some general information regarding workplace regulations.

When determining the value of your shares, it's important to consult with a qualified financial advisor or business valuation expert. They can assess the company's financial performance, including sales, profit margins, and owner compensation, to determine a fair market value for your shares. The lack

Financial Planner · Answer

Alright, let's cut through the noise. The lack of distributions due to high owner salaries definitely complicates things, but it doesn't necessarily mean you're screwed. EBITDA multiples are a common starting point, but they're not the only factor. The key is to demonstrate the true earning potential of the business under more disciplined management.

You need to build a case showing what the profits *could* be with reasonable salaries. Create a pro forma income statement that adjusts those exce

CPA for Small Businesses · Answer

As a CPA, I understand your concern about the lack of distributions affecting your buyout valuation. While distributions are certainly a factor, they aren't the only determinant of a business's worth. EBITDA multiples are indeed a common starting point, but they must be adjusted to reflect the true profitability of the business.

In your case, the "crazy salaries" paid to the working owners are a critical point. A potential buyer (including your partners) will likely adjust the EBITDA calculatio

Small Business Consultant · Answer

Alright, let's cut through the noise. You're not necessarily screwed, but you need to be strategic. The high salaries impacting distributions are a hurdle, but not insurmountable. EBITDA multiples are indeed common, but they're not the only factor.

Here's the deal: Focus on demonstrating the underlying value of the business. Highlight the consistent sales, strong profit margins, and the fact that there's no debt. These are all major positives. You need to show that the business is a healthy, pr

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