Future Maintainable Earnings Method

The Future Maintainable Earning Method is commonly used to value a profitable business. It is a simplification of the Discounted Cash Flow Method. 
Profit means different things to different people.  You should make sure either you are talking about the total owners’ income or income after all the wages, salary and other expenses. Once you find out the profit you should use a right multiple i.e. to calculate owner’s return multiple should be between 1-2 and to calculate EBIT multiple should be between 1.5-3 (multiple 3 is used only if the business is really good).

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Free Business Value Consultation

Your Name *

Business Name *

Email *

Phone Number

Tell us as much as possible about your business. This will help us greatly in the consultation process.

Details *

Find me on YouTube

Recent Posts