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SALIENTVALUE


EBITDA SCHMEBITDA

Of the thousands of conversations I have each year with buyers and sellers of healthcare-related businesses, very few recognize the financial acronym EBITDA.  This is understandable because many health-care business owners began their companies out of interest in a particular field or passion, and less on the ultimate pricing of their business for an exit…

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Valuation And Pricing

Not long ago I had the following initial conversation with a small business owner: Owner: I had my business evaluated by a professional valuation expert. He told me my business was worth $2,500,000. AHC: I understand. When we thoroughly reviewed your company, including financial results over several years, we also considered all market trends and…

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Thoughts About Perceived EBITDA Adjustments

Earnings Before Interest Taxes, Depreciation, and Amortization (EBITDA) is a common term used in healthcare transactions.  Why?  Because it is a rough estimate of operating cash flow that can help sellers and buyers to price or value a business in an existing market. EBITDA is normalized or adjusted because owners of healthcare businesses, especially those…

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The Value/Price Dilemma

A seller of a healthcare business is looking to maximize the value of the transaction from a personal and financial perspective.  The complexity of maximizing value is what leads to the value/price dilemma. When sellers initially seek a valuation of their business the nature of the valuation depends on the source of the valuation.  Whether…

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7 Key Ingredients for Today’s New Value

While some things never change in established healthcare business (e.g. operating profitability is necessary 99% of the time) there have been some shifts of emphasis.  At the foundation is an expectation that a business will have a sustainable future, so that a new owner will generate at least a modest return on investment in a…

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