Step one
Recast the earnings
Start with net income. Add back your compensation, personal expenses running through the business, one-time costs, interest, depreciation and amortization. What’s left is seller’s discretionary earnings — the number buyers actually price.
Step two
Apply the right multiple
Multiples vary by industry, size, growth trend, recurring revenue, customer concentration and how dependent the business is on you. A two-person service company and a fifteen-truck operation do not trade at the same number.
Step three
Adjust for reality
Then we account for the lease, the equipment, the working capital that has to convey, transferable licenses, and whatever a lender will underwrite. Price means nothing if no buyer can finance it.