Articles Tagged ‘indianapolis financial’

Selling To Insiders

Saturday, December 26th, 2009

T Ray Head Original shot Feb 2008

Presented by T. Ray Phillips

If you contemplate transferring your business to an insider (employees, children or co-owner) and you want to get paid the value of your business, then, generally speaking, the value of your business cannot exceed four times the true cash flow of the business (as illustrated in the previous issue of The Exit Planning Review™). We have defined true cash flow as the amount of pre-tax money distributed to owners via salary, bonus, distributions from the company such as S-distributions, and rental payments in excess of fair market rental value of the equipment or building used in the business. Let’s look at how cash flow determines the sale price to insiders.
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