Determining the Value of a Business

Set the value of the business operation by using the Discretionary Income Method. Learn how the risk factors affect the final value.

Business and Industry Growth

Business and Industry Growth

The second most weighted factor in the risk multiplier series for the Discretionary Income Multiplier Formula is business and industry growth.  This factor evaluates the overall change in an industry and in particular the business under review over the most recent three years.

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Calculating the Value of a Business – Discretionary Income Multiplier Formula

Discretionary Income Multiplier Formula

In the world of small business, the sale of a business is dependent on two critical elements.  They are DISCRETIONARY INCOME and the BUSINESS RISK MULTIPLIER.  These two elements are multiplied to create the overall value of the business operation.  In general, no small business operation is worth more than three times the discretionary income.

This content is for Bronze, Silver, One-Time and Contractor's Diagnostic members only.
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