When the phone rings and a customer is in a full panic about what to do with the ants in her kitchen, it is safe to say that you understand the value of your business: priceless.
But considering the fact that you may want to sell it someday, a pest control valuation is imperative to find out what your business is truly worth, beyond the peace of mind to your customers who are battling pests.
In valuing a pest control business, cash flow is king, so you need to determine how lucrative the company would be from day one of a sale. Along with cash flow, look into the multiples of cash flow that your prospective buyer is willing to pay. These two values are at the heart of determining what your business is worth.
When it comes to figuring out your pest control business valuation, the cash flow is the most important number to study. Sure, the EBITDA and adjusted EBITDA have a stake in the game. The add-backs are important, and the SDE (Seller’s Discretionary Earnings) does bear some responsibility in how to value a pest control business, but at the end of the day, you need to know what the cash flow is. Although some people own businesses because of tax help, or other ancillary reasons, consider the cash when it is time to do a pest control valuation
So you might be asking, “How much is my pest control business worth?”
ITEMS OF GAIN
OTHER COSTS OF DOING BUSINESS
Multiply the free cash flow by the multiples to determine your pest control valuation. There are a few additional core elements to consider.
The owner will likely want to buy all of the inventory, trucks, etc. that are needed to run the business. This will be part of the pest control valuation.
Secondly, your sale must be debt free, so you will need to pay off any debts before sale time. You and the buyer will determine the amount of cash in the till at sale time, and stick to that.
Finally, don’t discount the taxes and fees involved in the sale of a company. Expect to pay between 25-30% of the sale price in fees.
The number one consideration when it comes to the valuation of your pest control company is the cash flow. But it is often difficult to determine the value of your business while you are busy running it day in and day out. Brentwood Growth has made a career of valuing a pest control business like yours, and will help you find a buyer that understands your worth.
Contact us today to get some cash flowing from a sale.