May 6, 2020
Robert Hirsch from Freedom Factory discusses "How Does Recasting My Financials Affect the Value of My Business".
Listen to the podcast, watch the video, or read the transcript below.
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Transcript of Podcast
Hey, Robert Hirsch from Freedom Factory here. Sometimes we get so lost in our own nomenclature and vernacular and what we say in our industry, terminology that we forget that everybody doesn't know it. And a question that keeps coming up is, what is seller's discretionary cash flow? And when you go to sell your business here at Freedom Factory, one of the many things that we do is we recast your financials from taxes where you're playing a game of minimization to sellers to discretionary cashflow, where you're playing a game of maximization.
And some people say, well, isn't that two sets of books? Isn't that illegal? That's not it at all. What we do is we take your tax returns and we add in every allowable tax deduction that a new seller might not have to do. Maybe they don't have to take their board meetings in Europe and maybe they don't have to pay for their Ferrari and their vehicles and you know, et cetera, et cetera, et cetera.
There's also a lot of non-cash expenses like depreciation and amortization. That's value that your business creates, and we want to make sure before we apply the multiple that we apply the multiple to the seller's discretionary cash flow as opposed to the EBIDTA. In some companies, this can make a difference. of 20, 30 sometimes even 50% and if you can get 50% more for your business, why wouldn't you do it?
At Freedom Factory, we specialize in helping sellers get the biggest check of their life. If you need any help with any of this, please give us a call. Thank you so much for watching. Please hit like and subscribe and we'll see you soon.
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