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It's no secret that it's harder to value a private company compared to a publicly traded company. As a private business owner we can never truly know how much our business is worth until its sold in the open market. The fact is that the market decides what our business is worth. As an owner my thoughts and feeling is not going to make a potential buyer pay more or less for the business. More specifically the cashflow that the business is able to produce will most often determine what the market is willing to pay. Another side to this problem is that most businesses that goes on the market never sell. Thereby we can determine that the price is to high, but we can't know the true gap before there has been a transaction.
Our valuation for businesses in the industry usually ends up between 3-5 times free unencumbered cash flow. For a further discussion we encourage you to reach out by booking a call.
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