Business valuation in Las Vegas

How are valuations calculated?

The work starts with three years of tax returns and a current year profit and loss statement. Reported profit is rebuilt into a normalised earnings figure, then compared with what buyers have paid for similar businesses and what a lender would support.

A credible valuation is a range, not a single number, and it is always tied to the quality of the records behind it.

What is the difference between SDE and EBITDA?

Seller discretionary earnings, or SDE, generally adds one working owner’s compensation and benefits to earnings, along with supported adjustments. It is commonly used when a buyer will operate the business personally. Required replacement staff costs still need to be considered.

EBITDA means earnings before interest, taxes, depreciation and amortization. It does not automatically exclude owner compensation. Adjusted EBITDA should retain a market cost for the management work the business needs, including replacing an owner who will leave.

What are add backs?

An add back is a documented adjustment to reported earnings. It must fit the earnings measure being used and reflect a cost that genuinely will not continue. A tax deduction is not automatically an acceptable add back, and the same expense must not be counted twice.

• One working owner’s compensation and benefits when calculating SDE
• Interest, taxes, depreciation and amortization as appropriate to the earnings measure
• Documented one time costs that are not recurring operating needs
• Supported personal expenses, excluding costs a buyer will still need
• Nonworking family payroll, after considering any necessary replacement labor

What drives multiples up or down?

• Recurring revenue and contracts, which lift the multiple
• Customer concentration, where one account carries too much revenue, which lowers it
• Owner dependency, where the business needs you daily, which lowers it sharply
• Margins that hold up over time rather than spike once
• A trained team likely to stay through the transition
• Equipment condition and whether capital spending is due
• Working capital and inventory needed to run the business day one

What does SBA financeability do to value?

A business a bank will lend against reaches far more buyers, because most individual buyers need financing. Clean records, transferable licences, an assignable lease and earnings that cover the loan payment with room to spare all widen your buyer pool, and a wider pool supports a stronger price.

What does a valuation not do?

A valuation is not an appraisal for a court, a lender or a tax filing, and it does not guarantee a sale price. The market sets the final number. What a valuation does is tell you where to start, what is holding the number down and whether the timing works for you.

Which records should I gather before a valuation?

• Three years of business tax returns and annual profit and loss statements
• Current year profit and loss statement and balance sheet
• An itemized add back schedule with receipts or payroll support
• Lease terms, equipment details, inventory and outstanding debts
• Customer concentration, key contracts and the owner’s responsibilities

Does the value include inventory, debt and working capital?

It depends on the agreed transaction structure. State whether the range includes inventory, equipment, real estate or a required level of working capital. Business value is not the same as the cash an owner receives after debt, fees and taxes.

Ask your accountant and attorney to review the proposed structure. A cash offer and a seller financed offer at the same headline price can produce different proceeds and risks.

What are the next steps?

Start with the free business valuation for a fast estimate, or use the complimentary business analysis when you want the deeper review with documents, add backs and financing stress tests. When you are ready to move, read how to sell a business.

Who can help review my valuation?

Jennifer Franco is the business broker and Nonnie Group is the brokerage. Review the Las Vegas business broker guide for the confidential sale process, or call 702-848-4663 to discuss your records.