After 27 years, how can I put a price tag on my company?
I am a commercial loan broker who is 27 years in business and I have a large base of customers that I have arranged financing for. How can I sell my business when all I have is a database of business customers that I have done financing for? After 27 years, how can I even put a price tag on my company? I don't know how to even evaluate what that is worth.
Presumably, the only thing of significant value you would be selling is your book of business and contact database. There are a myriad of formulae for calculating a business's value, usually all based on some multiple of earnings (anywhere from 1-10 times depending on size and longevity), or, for smaller businesses, a much smaller multiple of revenue, or both. The first step should be to consult a business broker (I am not one), who should be able to give you a complimentary ballpark figure or you can pay for a full valuation. Beyond the value, there are a lot of Ts to be crossed and Is to be dotted, which will require guidance from a business attorney, CPA, and others. http://www.bizbuysell.com is a commonly used site for listing and buying businesses, which might give you some valuation ideas for your company.
There are three broad approaches to valuing a business: asset based approaches, earnings based approaches, and market based approaches. You should consult a valuation firm, or a business broker who knows how to value businesses. Not all business brokers know how to value businesses. If the broker gives you a rule of thumb, or say that your type of business sells for X times earnings or Z times Revenue, move on to another broker who does know how to value a business.