CALCULATE ESTIMATED SALE PRICE
Follow these steps to calculate your Adjusted EBITDA that will be used for a sale. Some refer to this as SDE (Seller Discretionary Earnings). Don’t fret - we will help you calculate this number!
STEP 1: Add Back the Basics
Start with your Net Income, and add back Interest, Taxes, Amortization, and Depreciation. These expenses are not related to your kennel’s ongoing financial performance, and are unique to your business (i.e. will be different for the buyer).
EBITDA = Net Income + Interest + Taxes + Amortization + Depreciation
STEP 2. Adjust for Owner Expenses and One-Time Expenses
Your business financials post-sale will likely look different than it does now. Thus, we need to calculate what your earnings would be with a new owner.
Exclude all owner payments, including W2 wages, payroll taxes, and 1099 payments made to you
Exclude all payments for those not involved in the business (e.g. family members not working in the business)
Exclude all owner expenses that would not continue post-sale (e.g. auto expense, meals and entertainment, cell phone, etc.)
Add any payroll expense, including payroll taxes, that would be needed to replace the hours you are working at the kennel.
Identify any large one-time expenses that are on your P&L
Adjusted EBITDA = EBITDA + Owner/Family Wages + Owner Expenses - Replacement Hours + One-Time Expenses
Step 3: Apply a Multiple to Calculate Value
Typical Multiple for an individual kennel is 3.5-4.0x Adjusted EBITDA. Partner With Us for 4.5x-5.0x Adjusted EBITDA