BALANCE SHEET VALUE: Of course, much will change on the Balance Sheet with every bit of business conducted between today and the Close of any Sale of the business, and to the extent those changes shall increase Balance Sheet Value, the Sale price shall increase or the extent those changes shall decrease Balance Sheet Value, the Sale price shall decrease, but, at at May 31, 2017, the Company is being offered for sale in a Share Sale that includes everything the Company owns and owes, with the certain following exceptions:
- As at May 31, 2017, we have EXCLUDED $133,869 from Cash on Deposit. This amount is to offset and to pay the $133,869 in credit card payables (below) which are also to be EXCUDED from the sale.
- As at May 31, 2017, there is $17,729 shown in other current assets. This amount is made up primarily of loan receivables; loans to employees and/or other parties and are personal and non-business related. None of such shall remain repayable to the company following the sale and thus have been EXCLUDED from the sale.
- As at May 31, 2017 there is $131,869 payable on credit cards. Any and all credit card payables will be satisfied at or prior to the Close of Sale and are thus EXCLUDED from the Sale Price.
- The net effect of the above combination reduces the current Net Book Value of the Balance Sheet by $17,729, as you can see in the above.
It should be noted that we have INCLUDED the $963,737 Cash in the Sale Price, which amount approximately offsets the $896,799 in Accounts Payable. Leaving that amount of cash may or may not be deemed advisable, and if not, it is anticipated that the amount exceeding acceptability would be spent just prior to the Close of Sale on the reduction of the $896,799 in Accounts Payable and wound be a direct offset. But to the greatest extend possible, cash will be left for the new owner to administer.
The $5,010,809 Selling Price is equal to 5.7 times $882,929 *ebitda (earnings). The $5,010,809 includes $2,099,501 Net Working Capital, in which case, Selling Price minus Net Working Capital calculates into a Net Selling Price of $2.911,308 which is equal to just 3.3 times *ebitda. (*ebitda = earnings before interest, taxes, depreciation and amortization.)
As at May 31, 2017, at 5 months year-to-date; sales are $3,684,766 with *ebitda of $565,649 (15.3%). Current year sales and *ebitda are projected to close out the year, 7 months from now, at about $7,480,244 with *ebitda of $839,775 (11.2%). That is based on a calculation very consistent with the company's historical sales and *ebitda cycle over the past five years, of first 5 months vs. last 7 months. Sales have generally been 49% during the first 5 months and 51% during the last 7 months and over the past 5 years the company's average *ebitda has been 10.9%.