Big Deal Small Business: Pro Forma Payroll in SMBNovember 20, 2022 | Issue #75If this was forwarded to you, check out the archive and subscribe here.Owner dependence is one of the most common risks to overcome when buying a small business, especially <$1.5 million in EBITDA.My deal was no different, with two owners (and one owner's wife) heavily involved in day-to-day operations. But setting aside the risk element for a moment (i.e. feasibility of replacing them), today's post walks through my approach to figuring out the costs required to replace the owners.I recently wrote about how to bridge from SDE to Buyer's EBITDA to Cash Flow. One of the key line items in that bridge is "Replacement Hires" -- this post basically dives into how I come up with the number to plug into that line.Note there are some Excel screenshots in this post, so please click on "download images" if your email client is blocking them from loading.
Pro Forma Payroll in SMB
Pro Forma Payroll in SMB
Pro Forma Payroll in SMB
Big Deal Small Business: Pro Forma Payroll in SMBNovember 20, 2022 | Issue #75If this was forwarded to you, check out the archive and subscribe here.Owner dependence is one of the most common risks to overcome when buying a small business, especially <$1.5 million in EBITDA.My deal was no different, with two owners (and one owner's wife) heavily involved in day-to-day operations. But setting aside the risk element for a moment (i.e. feasibility of replacing them), today's post walks through my approach to figuring out the costs required to replace the owners.I recently wrote about how to bridge from SDE to Buyer's EBITDA to Cash Flow. One of the key line items in that bridge is "Replacement Hires" -- this post basically dives into how I come up with the number to plug into that line.Note there are some Excel screenshots in this post, so please click on "download images" if your email client is blocking them from loading.