WHAT IS YOUR STAFFING COMPANY WORTH?

Everything is for sale at the right price and every business owner wants to know the answer to the above question. What determines the “worth” of the business? Most businesses are evaluated by some multiple of earnings, which plays a key role in the total acquisition price. But what factors determine the multiple?

EBITA x multiple = SALE PRICE

There are two driving forces that affect the value of a staffing business. They are internal and external. Some of the external factors that exist are:

• Overall industry growth potential

• Local economy

• Local Political Climate

• Segment of Staffing Market Served

• Amount of Interest by outside investors or larger staffing companies lookingto increase market share

These are factors that individual owners have little control over.

Internal factors are those that an owner can control. They involve the overall financial strength of the company. These include:

• Financial position of your customers and the average turn of your accounts receivable

• Diversification of your accounts receivable portfolio

• Length of contract or exclusivity agreements with your clients

• Percentage of temporary placements to overall business

• Earnings Before Interest, Taxes and Amortization (EBITA)

EBITA is one of the most important internal factors that affect the sale price. This number really affects both sides of the equation. The greater EBITA is then the more your company is worth.

MAXIMIZE YOUR COMPANY’S WORTH BY USING DAMIAN SERVICES

Sales and Income. These are the most important items in the equation that determines the “worth” of your business. The higher the sales, the more market share your company owns. The higher percentage of sales due to temporary help placements, the more valuable your company will be. Lastly, the higher the sales the more dollars will flow to EBITA.

Using Damian Services will maximize the net worth of your business… period. Damian supplies unlimited payroll funding that will allow you to increase the net earnings side of the equation with temporary help placements.

EBITA x multiple = SALE PRICE

Damian also provides a complete back office outsource solution that allows you the time to concentrate on the left side of the equation (multiple). This will help your company accomplish two things. First, choose what segment of the market to develop and second determine which market(s) to expand.

EBITA x multiple = SALE PRICE

Self Funded or Limited Funding Using Damian’s Unlimited Funding

Current Billings = $1,000,000                                          Potential Billing $3,000,000

Current EBITA = $100,000                                                Potential EBITA = $290,000

Current Value of the company                                          Potential Value of the company
$100,000 x 4 = $400,000                                                 $290,000 x 4 = $1,160,000

In this example, the “worth” of the business increased by 290%

By outsourcing your back office you are swapping a fixed expense for a variable one, your company will save thousands of dollars on personnel and general administrative expenses.

Most of the time, the purchaser may increase EBITA by the amount of the variable expenditure. For example, by outsourcing your back office, perspective buyers do not have to add duplicate personnel or offer severance packages to those employees that have to be reassigned. They simply add the outsourcing fee to EBITA which increases the net worth of the business.

For more information call 800.232.6426.