Business valuations are calculated using a variety of factors.
Seller’s Discretionary Earnings ("SDE") generally plays a large role in determining value, since businesses are usually priced based upon a multiple of their earnings. However, SDE is not the only factor: industry, longevity, employee structure, condition of the assets, inventory, location and lease, quality and diversity of the accounts, patents or intellectual property, and the general state of the economy can all impact a business's valuation. Outstanding business or personal debt, initial cost to establish or buildout the business, and projected future revenues have no direct impact on a business’s value.
No matter what any Broker claims your business is worth, the market ultimately determines its value. If it is priced too high and doesn't sell, its value to you is ZERO! BottomLine keeps this firmly in mind and will value your business with an experienced eye to determine an asking price the market will bear.