Discretionary Income

Discretionary income is the net profit from a company after adjustments for owner/management issues. Learn what these factors/issues are before calculating the net income of the potential small business.

Stability of Historical Earnings

Stability of Historical Earnings

No other element of the Multiply Discretionary Income Formula has as much weighted value as the historical earnings of the company.  Every knowledgeable business entrepreneur, accountant, lawyer, broker, you name them; they look for this information first.  There’s a reason for this.

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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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