Determining the true worth of a small business is far more complex than valuing a simple asset, and this episode provides essential financial advice on business valuation metrics. We explain the core formula—cash flow (measured as EBITDA or Seller's Discretionary Cash Flow) multiplied by a risk factor—and detail how elements like repeatable processes, strong documentation, and accurate accounting services can drastically increase the risk multiplier, leading to millions more in sale proceeds. Furthermore, we discuss the current influence of private equity driving up valuations for predictable businesses (like auto repair and HVAC), and advise owners to start preparing for a sale at least ten years out to tighten up systems and ensure their business is funded by a bank, as the final sale price is always determined by what a lender is willing to underwrite.

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🎙️ Kaizen Time is part of the Blood, Sweat & Business podcast series by Kaizen CPAs + Advisors. We help small business owners make smarter financial decisions—without the fluff.

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