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3X net earnings averaged over 5 years. Play with that one but don't leave the A off of EBITA. Amortization is a big one depending on what you acquire for operations.
Go find a CPA who is certified as business valuation analyst.
For the answer to 2. there are too many different ways of accounting for percentage of profit that you want to show and the reason you want to show it. For tax purposes you want as little profit to hit the bottom line as possible, ie; expense everything you possibly can. For pusposes of borrowing or sale you want as much profit to hit the bottome line as possible.
In short there are too many differences and circumstances that effect value as well as method of accounting, Whether you are an LLC, partnership, C corp or sole practioner to be able to answer your questions. A CPA could run several different scenarios for you or twenty different ones. Too many variables.
Yep, started from scratch - blank sheet - no clients and grew it over 8 years then sold. Signed a 2 yr employment agreement then went to court 4 times for breach of contract. DON'T DO IT!!!!!
Hi Cody-
If it were me, I wouldn't give, promise, or offer stock in your new company until those individuals have shown you they can "plan the work and work the plan"...your way! They have to show you they can sell themselves, the company, and your new service... your way! You'll save yourself a lot of grief doing this!
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