Companies worth?

[Lurkos]

How can you tell how much your company is worth? For example, if you pull in $120 a month, how do you base that? I've heard that you sell for a years worth of income, but I've also heard to sell for 2 years worth of income? Can somebody fill me in? Thanks.

[GeorgeB]

Easy, Lets say you bring in $10,000 a month. And lets say you after paying your bills and employees and over head if you have any it all comes to $5,000 a month. That means after you pay everything. your company is making $5,000 a month profit. Then if you have been in business for a years time lets say. you just take $5,000 times 12 and that is one way. There is never a sure fire way beings the financials of a company always change

[Robert]

Easy, Lets say you bring in $10,000 a month. And lets say you after paying your bills and employees and over head if you have any it all comes to $5,000 a month. That means after you pay everything. your company is making $5,000 a month profit. Then if you have been in business for a years time lets say. you just take $5,000 times 12 and that is one way. There is never a sure fire way beings the financials of a company always change

There are accurate ways, by factoring in the depreciation of assets that the company has that would include in the overall cost. For a hosting business, I would just say you'd ask what your net profit is + maybe 15% ontop of that.

[GeorgeB]

I knew you would figure up the net profit of the company but where you get 15% at?

[Robert]

I knew you would figure up the net profit of the company but where you get 15% at?

It's a random % I put in. I would want some type of "commission" for having setup the company and cover any costs for transferring ownership, etc etc.

[tandoc]

How can you tell how much your company is worth?

Monetary value less depreciation of ALL your assets. Simple. It's probably not the answer you were looking for, but it answers your question.

If you're desperate, sell for a little less than that, anything more is a bonus.

[GeorgeB]

I didnt know he was looking to sell. I thought he was just asking a general question. Or maybe he was lol.

I also would want to make a good % if I was the one who started the business and then sell it to someone else.

[tandoc]

I also would want to make a good % if I was the one who started the business and then sell it to someone else.

However, what you want will usually vary from what potential buyers want. You have to be realistic...