EP 68: What Is Your Business Actually Worth: The Number Most Owners Never Calculate

Most owners have never put a number on the business they have spent their life building. This episode puts one there. Jimmy Nicholas and Dustin Burleson take apart what a business is actually worth, what changes that figure, and what an owner can do about it long before a sale is on the table. Jimmy sold his agency to private equity in 2019, and he walks through the parts nobody warned him about. Dustin has bought, sold, and advised on the other side of the table, and he brings the buyer's view of what makes a business worth paying up for. \*\*In this episode:\** \- Why the consultants Jimmy paid tens of thousands of dollars were wrong about a personality-based business being unsellable \- The question that tells you whether you own a business or a high-paying job: if you were gone tomorrow, does it tank in 90 days \- \*\*Recastable expenses\** and the owner salary add-back, and why the math changes once EBITDA crosses one million dollars \- Why recurring revenue commands a different class of multiple, and how consumer brands get valued on revenue rather than earnings \- The \*\*Rule of 40\*\*, and the third, third, third formula Jimmy ran as guardrails without knowing it had a name \- Dustin's three rules of negotiation: who you are dealing with, never negotiating under duress, and going one year further back in due diligence than you think you need to \- Why the best negotiating position is not needing the deal \*\*Timestamps\** \- 00:00 Intro \- 00:18 Why this topic, and the four kinds of owner listening \- 02:18 Small business as a wealth generation vehicle \- 03:18 Addressing the skeptic: what the consultants got wrong \- 08:18 What building it to sell actually changes about running it \- 10:18 Exit strategy: why are you getting off the highway \- 13:18 The 90 day test \- 16:18 Jimmy's 2019 sale, and what the buyer could give his team that he could not \- 20:18 EBITDA, recastable expenses, and the owner salary line \- 23:18 Multiples by industry, and revenue multiples versus earnings multiples \- 26:18 The Powerball whiteboard exercise \- 30:18 Creating your own luck, and the room where Jimmy raised his hand \- 32:18 Due diligence, and why it is worth going through \- 35:18 What a bad negotiation looks like \- 40:18 The liability line, and the question Jimmy asked his attorney \- 44:18 What each of them wishes they had known \- 48:18 The Rule of 40 \- 54:18 What is coming next month \*\*A note on the numbers.\** The multiples in this episode are not one range. Jimmy speaks generally about businesses under one million dollars in EBITDA. Dustin's four, seven, and ten times figures are scoped to orthodontics specifically, and his Uber, Airbnb, and DoorDash figures are multiples of revenue rather than earnings. Know which one applies to you before you anchor on it. \*\*Get the resources.\** The valuation worksheet for this episode, along with the full transcript and everything referenced, is at \MomentumInsiders.com. Free to join. \*\*Next month:\** owning your assets versus renting them, and the things in your business you may think you own but do not. Get additional resources, scorecards, and working frameworks at WealthyMomentumPodcast.com Subscribe on YouTube: YouTube.com/@WealthyEntrepreneurHQ Learn more: [WealthyEntrepreneur.com](WealthyEntrepreneur.com) Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.