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Understanding Valuation When Buying and Selling a Business with Phillip Ramsey and Bryan Dewhurst

Episode 68:

Working for someone else, you might ask the question: Is my hard work paying off? The Uncommon Path often involves business ownership in one form or another. We see it over and over again that when you own a business, your hard work is rewarded. There will be ups and downs for sure, but the rewards outweigh the challenges.

In this episode, we are exploring what it takes to buy and sell a business. How do you know—whatever side of the transaction you are on—whether you are getting your money’s worth?

That’s why we wanted to explore different ways of valuation of a company, and also different ways for a buyer to purchase a company. Should you just buy the business with 100% cash? Should you opt for seller financing, or something in between.

We love helping people find the right answers for them, and if you are looking to buy or sell a business, that’s what we want to do for you in this episode.

What You Will Learn in this Episode:

  • Why 2020 might be a great time to buy a business
  • Why there are multiple ways to value a business
  • How funding a business is like a teeter-totter
  • The advantages and restrictions on rolling an IRA into your business 401(k)
  • Learning the “net take” method of business valuation
  • Why a business seller might not want to take a lump-sum payment for the business
  • The double-edged sword as a business owner of protecting your money from taxation and valuation when you go to sell
  • Understanding the percentage of revenue model of business valuation
  • What types of businesses are the best fit for different valuation methods
“I would say in the entrepreneurial space and with the Uncommon Path, your hard work is not only valuable, but it is rewarded.” – Phillip Ramsey Click To Tweet “One option for stepping into the Uncommon Path is to pay 100% for a business with cash, or finance 100% or somewhere in between.” – Bryan Dewhurst Click To Tweet “There are a lot of ways you can structure a business purchase with a mix of up-front cash and seller financing. If you are the buyer, just make sure you keep enough cash on hand for the unexpected.” – Phillip Ramsey Click To Tweet “You can rollover your IRA into your Business 401(k) and instead of putting that into mutual funds, you can use the money to purchase company stock.” – Bryan Dewhurst Click To Tweet “If you find an opportunity to buy a business, how in the world do you know what to pay? How do you know if this is a good investment? You need answers to those questions.” – Phillip Ramsey Click To Tweet “The beautiful thing about buying a franchise is you’re kind of buying a business in a box. It’s very clear what the cost will be.” – Bryan Dewhurst Click To Tweet “Working out a deal between buyer and seller is a concert for sure. The more upfront and honest you can be as a buyer or seller, the better. And as much as possible, trust but verify.” – Phillip Ramsey Click To Tweet “Sellers often overvalue their business, which is understandable. You’ve put your blood, sweat, and tears into this business, and putting a price on that is a difficult process.” – Bryan Dewhurst Click To Tweet