Step One: Find the Real Earnings
Your tax return is built to keep taxes low. A buyer wants to know what the company would earn for them. So a broker starts by recasting your profit and loss statements for the last three years.
Recasting adds back costs a new owner would not carry: your own salary and benefits, personal vehicles and travel, interest on debt you will pay off, depreciation and true one time expenses such as a lawsuit or a move.
It also removes income that will not repeat, like the sale of a truck or a loan deposit. Each add back needs proof. Buyers check them line by line, and one weak item can make them doubt the rest.
SDE or EBITDA: Which Number Applies
Seller's discretionary earnings (SDE) is the total benefit to one working owner: profit plus the owner's pay, perks and the other add backs. It is the usual measure for companies selling for under about $2 million.
EBITDA is earnings before interest, taxes, depreciation and amortization, after paying a market salary to whoever runs the company. It fits larger companies where the owner has stepped back and a manager does the work.
The difference matters. If you pay yourself $150,000 to run the place, that salary is added back for SDE but treated as a real cost for EBITDA, since a buyer would have to hire someone.
Turning Earnings Into a Range
The earnings figure is multiplied by a number drawn from sales of similar companies. As a general guide, many small and midsize companies trade at roughly two to three times SDE. Some sell for less and some for more.
EBITDA multiples for larger companies tend to be higher, and they vary a lot by industry, size and buyer type. Treat any published figure as a starting point, not a promise. Only a review of your own records gives a useful range.
Inventory, real estate and working capital are often handled separately from the multiple, so ask what any quoted number includes.
What Pushes the Multiple Up or Down
- Owner dependence. If customers call you and only you, the price drops. A manager and documented systems raise it.
- Customer concentration. When one to three customers bring in more than about 15 to 20 percent of sales, buyers discount or walk.
- Recurring revenue. Service agreements, routes and contracts are worth more than one time jobs.
- Trend. Steady or rising results help. A decline, or a sudden spike before the sale, hurts.
- Lease and location. Years left on a transferable lease at market rent protect the price.
- Clean books. Cash that never reached your return does not count. You are paid only for what you can prove.
A Broker's Opinion Versus a Certified Appraisal
A broker's opinion of value estimates what the company would likely bring on the open market today, based on recent sales and current buyer demand. It is meant to set an asking price and plan a sale.
A certified appraisal is a formal written report by a credentialed appraiser, built to stand up for estate and gift tax filings, divorce, partner disputes or court. It costs more and takes longer.
Lenders financing a buyer often order their own independent valuation. If you only want to know whether selling makes sense, a broker's range is usually where to start.
Jacksonville Details That Show Up in Value
Florida has no personal income tax, which affects what you keep but not what a buyer pays. State steps at closing still matter, such as the doc stamp tax on a seller note if you finance part of the price.
Industry matters too. Recurring route businesses like pool service companies are valued very differently from project firms. When you have a range, our guide to selling your Jacksonville company covers what comes next.
To get a private value range, send the two step form or call (904) 555-0129.