Issue link: http://psai.uberflip.com/i/1406432
16 I PSAI Association Insight, September 1, 2021 Certified Valuation Analyst, and you can have confidence in both their processes and their result. And of course, you can always seek a second opinion. The National Association of Certified Valuation Analysts website (nacva.com) is a great resource for learning more about this important profession and finding a list of certified professionals. Valuing your business. Whether you attempt to do the valuation yourself or you hire someone, start by gathering your balance sheet, financial statements, loan documents, and any other resources that contain data concerning the value of your business income, assets and financial health. Valuing A Portable Sanitation Business (continued from page 15) Experts on rental valuation suggest that most private, nonpublic equipment rental businesses have generally proven to be worth some- where between 4.0 and 6.5 times earnings before interest, taxes, depreciation, and amortization (EBITDA), which often works out to somewhere around 1.0 to 1.2 times annual revenues. What that value will ultimately turn out to be depends to some degree on the current state of the market, your location(s), your asset ages and values, and your business prospects. Experts on rental valuation suggest that most private, nonpublic equipment rental businesses have generally proven to be worth somewhere between 4.0 and 6.5 times earnings before interest, taxes, depreciation, and amortization (EBITDA), which often works out to somewhere around 1.0 to 1.2 times annual revenues. Valuation experts may argue about this, and they sometimes manipulate the numbers to get closer or further away from it, but this is a good place to start if what you need is a general idea of what your business is likely to be worth. Steps: 1 Find your last three years' net earnings 2 Add back any "extras" like salaries, bonuses, perquisites, and perhaps rent you paid yourself and/or your family members that are, in fairness, more than you'd pay to third-party employees in the same roles in each of those years 3 Add back the interest, depreciation, taxes, and amortization you took 4 Divide the total by three 5 Multiply the quotient by 5.25 6 Compare this number to your average total annual revenues for those three years. If the two numbers are very different—by more than about 25 percent—stop and contact a business valuation professional before proceeding further. If they're fairly close, this is a reasonable starting point for assessing the likely value of your business. Additional resources. In addition to valuation professionals that you can hire, there are two key groups that offer a series of tools to support you in the process of determining a value for your business. • The US Small Business Administration (SBA) (www.sba.gov) is an independent agency of the federal government that exists to aid, counsel, assist, and protect the interests of small business concerns and to preserve free competitive enterprise. • The Service Corps of Retired Executives (SCORE) (www.score.org) is a nonprofit association dedicated to helping small businesses get off the ground, grow, and achieve their goals through education and mentorship. SCORE offers a tool to help you estimate the fair market value of your business. While the tools from these groups are not portable sanitation-specific, they are very thorough. The PSAI does have some members-only tools that are focused on our industry, and these can augment the resources provided by the SBA and SCORE. Check out the Industry Resource Library for more information.