Business valuations are calculated a number of ways, as outlined in our business valuation blog post here. What’s important to note, though, is that typically an owner who is selling his or her business will want to maximize value.  Our goal with this post is to break down the factors that make the largest impact to company valuation.Recurring revenue / subscription revenue.  Recurring revenue gives confidence to the longevity of the business.   If there is any way to have recurring / subscription oriented revenue, this will command a higher valuationSEE DETAILS

Valuation, as defined in a dictionary, is an estimation of something’s worth, usually carried out by a third party appraiser.   In terms of a business, valuation is the dollar amount that a third party acquirer will pay for ownership of a business.  An unofficial but broadly accepted rule is that something is worth what someone else will pay.  This is the underlying principle behind valuation calculation, and so the next factor that is considered is:  who is the buyer? Buyers will value a business differently based on their intended purpose for it.SEE DETAILS

Simply stated, an ESOP, or employee stock ownership plan, is a qualified defined-contribution benefit plan comprised of company stock, held by shareholders at a company (which is usually all vested employees).  For the purposes of this website, however, an ESOP is a way to sell your company to your employees, enabling all employees to become shareholders in the company, and selling shareholders to obtain liquidity.ESOPs are a great way to align the financial incentives and rewards of employees with those of ownership, as all employees will hold shares in theSEE DETAILS